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    Home » Bank Account Closure: Avoid These Mistakes to Prevent Loss
    Banking

    Bank Account Closure: Avoid These Mistakes to Prevent Loss

    Nisha ChawlaBy Nisha ChawlaNovember 25, 2024No Comments5 Mins Read
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    Bank Account Closure: Avoid These Mistakes to Prevent Loss
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    Closing a bank account seems like a simple task, but it’s not as straightforward as withdrawing your money and walking away. If not done carefully, it can lead to unexpected fees, complications, and even loss of funds. Whether you’re closing a salary account, savings account, or any other type, here’s a comprehensive guide to help you avoid common mistakes and ensure a hassle-free experience.

    Why Do People Close Bank Accounts?

    There are several reasons why someone might decide to close their bank account:

    • Relocation: Shifting to a new city or country.
    • Excess Accounts: Managing multiple bank accounts becomes cumbersome.
    • Bank Charges: High fees or dissatisfaction with bank services.
    • Merging Finances: Consolidating accounts after marriage or for better management.

    No matter the reason, knowing the process and the precautions can save you time and money.

    1. Avoid Closing Your Account Within a Year

    If your account is less than a year old, banks often impose a closure fee. This can range from ₹500 to ₹1,000, depending on the bank. To avoid these charges, wait for the account to complete one year before initiating the closure.

    However, there is an exception. Most banks allow you to close the account within 14 days of opening it without any penalty. This period is known as the “free look period.” If you’re unhappy with the bank’s services, act quickly within this timeframe to avoid charges.

    2. Settle All Dues and Charges

    Before closing the account, ensure that all pending dues like credit card bills, loan EMIs, or overdraft balances linked to the account are cleared. Failure to do so can lead to penalties or legal complications.

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    Check for recurring transactions such as automatic payments for subscriptions or utility bills. Cancel or transfer them to another account to avoid failed transactions after the closure.

    3. Transfer Your Funds First

    If your account has a balance, withdraw or transfer the money to another account before initiating the closure. Most banks only allow cash withdrawals of up to ₹20,000 during the closure process. For amounts exceeding ₹20,000, you’ll need to provide details of another account where the remaining balance can be transferred.

    Use NEFT, RTGS, or UPI to transfer your funds digitally for faster processing.

    4. Retrieve All Unused Cheques and Cards

    When closing your account, return any unused chequebooks, debit or credit cards, and passbooks issued by the bank. This ensures there are no loose ends that might cause complications later.

    Some banks might charge you for not returning these items, so check their policy in advance.

    5. Deactivate Internet Banking and Linked Services

    Banks do not automatically deactivate internet banking, mobile banking apps, or linked services when you close an account. Manually log in to these platforms and deactivate any linked services such as:

    • UPI IDs
    • Payment wallets
    • Automatic subscriptions
      This ensures your account information isn’t misused after closure.

    6. Get a Written Confirmation

    Always ask for a written acknowledgment or closure certificate after the account is closed. This document serves as proof that the account has been officially closed, protecting you from any future disputes or unauthorized charges.

    7. Plan for Joint or Salary Accounts

    If you’re closing a joint account, ensure that all account holders are present during the process or provide their consent in writing.

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    For salary accounts, inform your employer in advance and update them with the details of your new account to avoid delays in receiving your salary.

    8. Know the Bank’s Closure Policy

    Each bank has its own rules for account closure. Visit your bank’s official website or branch to understand the required steps. Most banks require the following documents:

    • Account closure form
    • Identity proof (Aadhaar, PAN, or passport)
    • Details of another account for fund transfer

    Frequently Asked Questions About Closing Bank Accounts

    Q1: Can I reopen a closed bank account?

    Yes, many banks allow you to reopen a closed account within a specific period, usually 12 months. However, this depends on the bank’s policy, and reopening may involve fees.

    Q2: What happens if I forget to close a dormant account?

    Dormant accounts attract maintenance fees over time. These fees can accumulate, eating into your account balance. If your balance becomes negative, it may affect your credit score.

    Q3: Can I close my account online?

    Some banks offer online account closure for specific types of accounts. However, many still require you to visit the branch to complete formalities.

    Q4: Is there a minimum balance requirement during the closure process?

    Most banks do not enforce a minimum balance requirement during the closure process, but it’s best to check with your bank to avoid surprises.

    Final Checklist Before Closing Your Account

    1. Transfer all funds to another account.
    2. Clear any outstanding dues.
    3. Retrieve and return chequebooks, cards, and passbooks.
    4. Cancel all linked services and subscriptions.
    5. Obtain a written acknowledgment from the bank.

    By following these tips, you can close your bank account without unnecessary hassles or financial losses. Proper planning and understanding of the process are key to a smooth transition.

    See also  Different Types of Savings Accounts You Can Open in Banks
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    Nisha Chawla
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    Nisha Chawla is a seasoned professional with 15 years of experience in banking, insurance, investment, and the debt sector. Holding a B.Com degree, she has been writing for the past five years, offering valuable insights on banking, loans, and financial schemes. Her passion for writing brings clarity to complex financial topics.

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