Closing Your Savings Bank Account? Check These 5 Points

Before closing a savings account, check these details and follow simple steps for your financial security.

Closing Your Savings Bank Account? Check These 5 Points

Here's what you should know about closing your savings account

Multiple savings accounts in one bank or different banks may sometimes come with certain benefits. Many people open multiple savings accounts to park their money with different banks to get more benefits, including higher interest rates.

After a certain point, they fail to maintain a sufficient balance across all the accounts and stop using more than one account.

The general practice is withdrawing all the money from the savings account and abandoning it. However, an active account, whether operated by the customer or not, may incur certain charges like fees for non-maintenance of average monthly balance and others.

It's advisable to close the account if you don't want to use the service anymore. A dormant account also runs the risk of being used for financial fraud.

You can close the bank account by visiting your home branch or raising a request through customer care services. Before closing a savings account, check a few details and follow simple steps for your financial security.

1. Check Account Balance And Keep A Record Of The Statement:
It's important to check the balance in your savings account that you want to close. Check the balance, download the statement, and keep a record of the statement for at least the past 2-3 years.

This will be helpful for future reference if you need to check details about any transaction made through the particular account. The statement is also important for filing Income Tax Return.

2. Settle Unpaid Balances And Service Charges:
Your bank may not allow closing the account if the balance amount shows in the negative.

The negative balance could be due to non-maintenance of the minimum balance and other service charges or fees. Negative figures on your savings accounts will also affect your credit score.

3. Standing Instructions And Automated Clearances:
If you are using the particular account to pay EMIs, bills and monthly subscriptions, cancel all such standing instructions or automated clearances linked to the savings account.

Closing the account without cancelling the payment instructions may result in missing the payment cycles. Failing to make payments on time would create a negative credit rating and affect your future financial prospects.

4. Account Closure Charges:
Many banks levy account closure charges if the savings account is closed within a certain period of time since the opening date.

Generally, the banks charge a fee for closing the account within a year of its opening. To avoid paying account closure charges, you should wait at least one year before closing the particular account.

5. Updating Account Details:
The savings account you want to close could be linked to EPFO, insurance policies, Income Tax Department and other government saving schemes.

In such cases, before initiating the process to close the account, update the new account details on all such services and savings schemes. This will help you avail yourself of the scheme's benefits and continue all transactions without interruption.

Many customers use savings accounts for mutual fund investments for systematic investment plans (SIPs).

When you withdraw money from your mutual funds, the amount also gets directly credited to your savings account. In such cases, before closing the account, update the new account details on all your mutual fund investments.