scorecardresearchClosing a savings account? Make sure to follow these five things

Closing a savings account? Make sure to follow these five things

Updated: 24 Aug 2022, 08:26 AM IST
TL;DR.
If you've already transferred money out of the account and taken care of any outstanding transactions, closing a bank account can be a straightforward procedure. However, there are several points to consider before closing a bank account.
If you've already transferred money out of the account and taken care of any outstanding transactions, closing a bank account can be a straightforward procedure.

If you've already transferred money out of the account and taken care of any outstanding transactions, closing a bank account can be a straightforward procedure.

A savings account is a simple financial instrument that enables you to deposit your money and often earn a small amount of interest. Because of their safety, dependability, and liquidity, they make a suitable place to store money that will be used for different purposes down the road, distinct from daily cash. These accounts are ideal for saving money for short-term objectives or for an emergency fund.

You might already know that.

Moreover, you might have several bank accounts. When you switch jobs, look for greater interest rates on savings at different banks, or even open joint accounts, it is simple to accumulate a number of bank accounts.

But do you actually need these many bank accounts?

Give a quick recall to all of your savings account. How many do you have?

Are you using all of them?

Has any of them been left idle for a time now?

Most likely, you can identify one dormant account that you haven't used in a long time.

No, No. Wait. I am not saying that. The World Bank did.

In its most recent Global Findex report, the World Bank reported that in 2021, one-third of Indian bank account customers had a dormant account.

So the point is, that if you are not using an account, why to bear the hassles of maintaining it. You can always choose to close it. However, there are several points to consider before closing a bank account.

Update your new account details wherever required

If you close your old salary account, be sure to inform your employer of the new account information so they may continue to credit you. Similar to the above, you must notify and update your government employer of the transfer in account if you were receiving a pension from government service after retirement in the account that was recently closed.

Stop or reroute all your automated payments

You must unlink any further debits or connections before closing your bank account. All linked trading accounts for securities as well as the primary and secondary credit cards issued by the bank associated with this savings bank account must be closed.

Submit a new alternative bank account number for your lender or institution that offers recurring deposits if your previous bank account is used to pay monthly loan instalments or invest in recurrent deposits.

Backup you account statements

Make sure you have all the savings account statements. One never knows when they might come in handy. Take a printout or save a soft copy if necessary. Therefore, you should avoid missing this step.

Clear all the debits and credits

Before you may close an account with something still outstanding, such as a deposit, you must make sure it has cleared. You risk the possibility of being charged an overdraft fee or an insufficient funds fee if your account doesn't have enough cash to cover a payment if you neglect to keep track of your outstanding transactions.

Beware of any hidden charges

In addition to possibly triggering overdraft costs, your bank might also impose a one-time closure fee. In many banks, if your account has just been open for a brief amount of time, charging this fee is typical procedure. To find out if there are any time constraints, it is best to review the old account's charge schedule.

If you've already transferred money out of the account and taken care of any outstanding transactions, closing a bank account can be a straightforward procedure. Many banks allow you to terminate an account online. Some allow you to cancel an account via email or online messaging. You can contact your bank to know the appropriate procedure.

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First Published: 24 Aug 2022, 08:26 AM IST