What was once a simple process of closing a bank account and opening a new one became complicated with the need to switch direct deposits and automatic payments. Plus, not all banks fully close your account when you request it — some, if you forget an automatic payment, will reopen then overdraw your account to accommodate that payment.
Nessa Feddis, senior vice president and deputy chief counsel for consumer protection and payments at American Bankers Association, says the handling of automatic payments varies, depending on the institution.
“Some reopen the account and pay it [the automated transaction] so that the customer won’t suffer late fees and other adverse consequences,” she says, adding that the bank typically charges an overdraft fee in those cases. “But there are banks that simply will return it and then they [the customers] have to suffer the consequences of a returned payment.” Some of those consequences could include fees for a late payment or returned payment, she says.
So how can you avoid those pricey fees? Follow these five tips from banking pros on how to properly close your account: