Closing a checking account can open
up a can of worms
Before giving your bank the heave-ho
-- whether it's a case of moving to a new institution or to a new
hometown -- give yourself at least a one-month lead time to make
the transition to the new account.
Otherwise, you could end up with bounced
checks, missing deposits or no access to cash from the nearby automatic
The key is to start with your checkbook first. Balance
it and make sure all outstanding checks have cleared before
the account is closed. Getting a jump-start will ensure that the
customer and bank agree on the amount of money due and bounced-check
fees won't leave the account vulnerable.
A rule of thumb is to open your new account before
closing the old account. That way, the flow of checks, ATM withdrawals
and other transactions will be seamless. Also, make arrangements
to stop direct deposit checks and benefits at least a month before
the move. You might want to give checks a full billing cycle to
clear through the old account before closing it.
Automatic payment deductions such as mortgage or life
insurance premiums should also be changed at least a month in advance.
While most banks can take new account information
over the phone, it's safer to provide a new address and phone number
Remove all contents from your safe-deposit box and
return the keys. Finally, let family members know that your account
is closed, so that heirs won't waste their time trying to recover
"forgotten" money in an old bank account.
Some banks move to help you
If you're planning to move to another city, some banks
will court you with a relocation package. Perks could include city
guides, maps or other items handy to customers moving to a new city.
Some banks have offer a free checking account and safe-deposit box
for one year.
Unexpected moving snafus, such as the moving company
only wanting a cashier's check, a grocery store that refuses to
take an out-of-state check or a flat tire en route to the new home
can all make for instant-cash scenarios.
So give yourself at least three weeks to get your
new account set up. That way there's a strong possibility you'll
have checks and a debit card in hand when you arrive in the new
banks make out-of-town moves easier
Mergers between banks such as Bank of America and NationsBank
have aimed to create coast-to-coast banking and ATM networks. With
that in mind, most large banks don't rely on in-branch visits to
close accounts. Customers can process their requests through the
bank's telephone call center.
Be forewarned, though: Ask if there will be a charge
for assistance or a fee for closing the account. It can cost $10
or more to close an account, on top of any monthly fees.
Automatic payments can
keep going and going
Under federal law, the customer must call or write the
financial institution requesting a stop on automatic payments at
least three days before the scheduled debit. If an oral request
is made the bank may require a written confirmation within 14 days
of the initial phone call, said Robin Leonard, a consumer debt attorney
and author of Money Troubles: Legal Strategies to Cope with Your
"The key is dealing with the business doing the automatic
deduction," Leonard said. "You certainly start with the bank but
you've got to talk with your mortgage company. Surprisingly, we've
heard it's been a nightmare for people who have joined the health
clubs and have tried to stop the payments."
-- Updated: Jan. 15, 2004