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What happens if you close your bank account with money in it?

There’s a lot of useful information out there on how to open a new bank account – what documents you need to bring, what information is required, how long it will take and what you can do with it.

But the question when it comes to closing your account is slightly different.

The fact behind this is that not many people close their accounts once they start using them.

But whatever the reason is, you may need to close your bank account. 

In the following section, we explain how to close your account.

How to close a bank account

In order to close a bank account, you’ll need to go through a few easy-to-follow steps.

First, you’ll need to review your exciting account agreement. Then, become familiar with the account closure procedure and your bank’s specific requirements. 

Next, you’ll need to open a new account with credit unions or other banks. Make sure that this step is fully complete before moving on to the other phases of closing your account. 

You’ll also need to transfer your direct deposits and automatic payments to your new account details. 

In case you have remaining funds available in your account before closure, withdraw or transfer your remaining balance. You can use an online method or withdraw the money in cash for smaller amounts. 

Next, get in touch with your bank and ask to formally close the account. If you work with a bank close to you, you can do so by visiting their branch or contacting them through telephone or email. Keep in mind that you’ll need to provide identification and account details in order to complete this step. 

Make sure to ask for written confirmation about the closure and keep this documentation as proof, in case you need it in the future.

Lastly, eliminate any old assets, like unused checks, prepaid debit cards, and others to make sure they don’t get into the wrong hands. 

Below, we dive into more detail about the options you have when closing your account with available funds in it. 

1. Withdrawals

The first option you have available to you when closing an merchant account with funds is to simply withdraw it in cash – from an ATM or at the cash teller.

When considering closing an account you’ve either probably not used much before or are ready to wind down after several years of use.t’s also likely that the funds available in this account are not of a high monetary value and thus be withdrawn without much hassle. 

This will ensure your account is at zero balance and your account will be closed more efficiently, smoothly and quickly.

2. Deposits to a different account

Another option you have is to transfer the funds from the account you’re about to close to another open account you may have and may wish to continue using.

This will again make sure that your closing account balance is at zero while not losing your funds.

3. Head office and service charges

In other cases, however, the funds in your account may go to a central account or to the bank’s head office.

These funds will be checked and should ultimately be claimed back by you.

Remember that banks usually charge fees for their services and some of the funds in your account may go towards this purpose.

Added perks: Statements and transaction history

Some banks in the UK offer the option of giving you your statements and transaction history for the last five years when closing your account.

In some cases, this is a value-added service, while in others it’s an optional extra.

So, check with your bank what type of information they can offer you upon closing your account.

What to consider before closing your bank account

Before you have your bank account closed, there are a few important things to consider. 

  • Outstanding transactions – Ensure that all debit card purchases, automatic payments, and checks have been successfully cleared. Outstanding payments that attempt to take place on a closed account can trigger fees and create challenges. 
  • Overdraft fees or negative balance Make sure that your bank accounts don’t have an unpaid balance or negative balance. Such overdrafts can also be a reason for additional fees and can significantly influence your credit report by being sent to a collection agency. 
  • Direct deposit funds – Check to see if all direct deposits have been redirected to your new account to prevent delays in accessing your funds. 
  • Account types – Don’t forget that there are more than one account type. Assess the situation to check if you should close multiple accounts, like your savings accounts or checking accounts. 
  • Credit implications – In some cases, having a closed bank account can impact your credit score. Usually, the influence will be less damaging when compared to closing a credit card, and it’s worth noting that the credit bureaus take into account how long your account was open and functioning. 
  • Banking history Keep in mind that a closed bank account can be marked in red in systems that monitor banking history. Make sure the account is closed on a good note to avoid future complications. 
  • Inactive accounts Sometimes, if you have a bank account that you haven’t used for a while, you may reach a point where the bank closes your account due to inactivity. 
  • Potential challenges In cases where your bank suspects fraudulent activity, like money laundering or identity theft, the bank immediately freezes the activity. 
  • Same bank transfers If you’re opening a new account with the same bank, your journey is likely to be much quicker and simpler. Ask if your financial institutions provide any special services for existing account holders switching to new accounts. 

When you take note of these elements, you can ensure a smooth and legally compliant bank account closure process.

Final thoughts

Most banks, when closing your account, would like to see the account being at zero before they proceed with the closure.

If you have funds in your account, you can either withdraw them or transfer them, or the bank will deduct certain charges from them to cover its costs.

Whatever option you choose, your account should be at zero before closure to ensure there are no surplus funds floating around in the banking system that remain unclaimed.

Ultimately, every bank has its own procedure for bank account closures, and you should double-check with yours.

This will reduce unnecessary or lengthy paperwork and procedures and will make the process hassle-free.

Disclaimer: Please be aware that the contents of this article and the myPOS Blog, in general, should not be interpreted as legal, monetary, tax, or any other kind of professional advice. You should always seek to consult with a professional before taking action, since the particulars of your situation may materially differ from other cases.

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