Closing your bank account? Do these 4 things on priority
New Delhi: Most people nowadays have multiple bank accounts. In fact, many salaried people hold multiple accounts as they change jobs or shift to another city. Generally, some banks convert customers’ zero balance salary accounts into regular savings accounts after a couple of months when they notice no salary credits for a long time.
It may be noted that you are required to maintain a minimum average balance in non-salary savings accounts and this can be a difficult task which is why it is advised that one should close any dormant account in order to avoid the charges that are levied for not maintaining a minimum average balance as specified by the bank.
If you are planning to close your bank account, here are 4 things you must do:
1. Stop all automatic debits: Before you go ahead and close your bank account, you need to de-link other debits or relationships and this includes closing any securities trading account linked with it. It also means that you need to de-link any primary and secondary credit cards issued by the bank linked with the bank account. If your old bank account is linked to repaying monthly loan EMIs or recurring deposit amount, you need to provide a new alternative bank account number for your lender to debit.
You can easily do this by providing these details while filling a de-linking account form issued by the bank at the time of account closure. You must know that it takes approximately a week to 10 days to close your other relationships connected with the bank account which you are closing. Once this procedure is complete, you can proceed to close your bank account.
2. Account closure form: In order to close a bank account permanently, the customer is required to visit the branch personally. At the branch, they need to submit an account closure form along with de-linking form, unused cheque book, credit card and debit card. In the closure form, the account holder is required to mention the reason for the closure of the account. You can also submit a letter to the branch manager containing your account details, the reason for closure etc.
In case of a joint account, the form or letter must be signed by both account holders. Also, do not forget to provide details of an alternative account to transfer the funds. You can either choose a demand draft or opt for national electronic fund transfer (NEFT), etc. as the mode of payment while closing your account. If the balance in your account is less than Rs 20,000 then it can be paid in cash during the closure process. Once the account is successfully closed, maintain the last bank account statement which contains details like the date of closure. This can be used in future for reference.
3. Update your new account details: If you are closing your old salary account, then update the employer with the new account details. Also, if your pension income from the government service after retirement was being deposited in the account that you just closed, you need to inform and update your government employer about the change in account details. If you have utility bill payments linked with the account that is to be closed, you need to provide the new bank account’s details for pre-authorised debit to continue.
4. Closure charges: One must know that banks don’t charge customers if the savings accounts are closed within 14 days of opening. However, account closure after 14 days, but before one year attracts closure charges. It is important to choose your bank wisely so as to avoid hefty closure charges. For example, India’s largest public sector bank SBI charges Rs 500 from customers who close their savings accounts after 14 days of the opening but before one year. If the account is closed after completion of one year, there are no charges for account closure.
It is worth mentioning that banks levy these closure charges so that they can recover the costs incurred by the bank while opening accounts and issuing cheque books, debit cards, passbook etc.