Closing an Account

For one reason or another, the situation may arise where you need to close your checking and/or savings account. Here are some factors to take into consideration before making this decision as well as how it can affect your credit.

WHY WOULD I CLOSE AN ACCOUNT?

There are several reasons why some may close their account. This could include finding better rates elsewhere, moving to a new state, or just needing a change. Closing your account for one of these, or a similar reason, shouldn’t have an adverse effect on your credit score.

WHEN SHOULD I NOT CLOSE AN ACCOUNT?

If your account is in negative balance because of overdraft, you shouldn’t close your account. Closing an account under these circumstances may cause damage to your credit score and won’t make the problem go away. Accounts with negative balances at closing may be sent to a collection agency resulting in additional fines or interest. It may also make it difficult to open checking or savings accounts in the future if you have a negative report.

WHAT SHOULD I DO BEFORE CLOSING AN ACCOUNT?

Ensure that there are no outstanding transactions and the balance on your account is either zero or a positive number. Make note of if you have any automatic payments tied to your account so you can switch them over. Once you go through the closing process, ask for some form of documentation from your financial institution to show the account is closed.