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How to dodge bank-switching fees

By David McMillin · Bankrate.com
Friday, June 1, 2012
Posted: 6 am ET

A new report from Consumers Union highlights how challenging and costly it can be for you to close your account at one of the country's big banks.

In an analysis of the 10 biggest members of the banking industry, the report shows that account holders can be subject to up to $55 worth of bank fees just for closing an account. However, being hit with a $55 goodbye from your bank is a worst-case scenario.

Here are three ways to keep your closing costs to a minimum.

Avoid wire transfers

If you've already opened an account at a new bank, wiring that money will put a dent in your funds. All of the banks in the report charged between $24 and $30 for a wire transfer. Instead, you could ask for the bank to write you a certified check for your funds. All of the banks charged $10 or less for this service. In case of any delays, I would also recommend taking some cash out, too, to ensure that you have some money while you wait for all of your funds to clear.

Don't close account too early

Five of the banks in this report (BB&T, Citibank, PNC, HSBC and U.S. Bank) charged customers for closing their accounts before a certain amount of time passes. Some charged customers for closing within 90 days, and others had even longer requirements of 180 days. By the way, if you're closing your account within such a short time frame, be sure to do some extra homework before you settle on a new home for your banking needs.

Check automatic payment, deposit sources

If you're a regular reader, you're probably familiar with the horror stories of zombie accounts: Banks reopen accounts due to the failure to reroute payments or direct deposits to a new account, and unaware customers wind up owing even more bank fees. When you move to a new financial institution, make sure your employer knows to edit your direct deposit info and reprogram all of your bill payments, too.

What do you think of the report? Have you been hit with fees for closing a bank account?

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2 Comments
Ray
June 01, 2012 at 10:21 am

I have in fact switched checking relationships three times over the past three years. I did not incur any fees, in fact I managed to receive a bonus of $125 when I returned to Chase after leaving them for about 14 months (special promotion with penalties if you close the account within 6 months).

The important thing is to read the fine print before you sign on. When you want to switch, open the new account first and run the accounts in tandem until your pay is switched to the new account and everything old clears on the old account. Once the old account is clear of all activity, then and only then close it.