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How to close a bank account

What we'll cover

  • How to close out an old account

  • Steps to take after closing the account

  • Benefits of opening an Ally Bank account

Even with everything that’s tied to a bank account — debit cards, autopay, mortgage payments — it doesn’t have be hard to close your account and open a new one that better suits your needs. Follow this guide to help you get a fresh start with Ally Bank without a messy split.

Step 1: Get your Ally Bank account ready to go

Before you start the close-out process, you may want to set up your new account at Ally Bank. The biggest question you’ll have to answer is which type of account you want to open, whether it’s a checking account , savings account , money market account or something else. You may already have one in mind or need to do some research.

Step 2: Review your old bank's policies

Before closing your account, inquire if your current bank charges account closing fees or penalties. While you likely won't be charged for closing a basic savings account, you might have to pay for other accounts, like money market accounts. If you withdraw all the funds from a certificate of deposit (CD) before its maturity date, you typically have to pay an early withdrawal penalty.

Step 3: Stop all account transactions

Cancel any automatic deposits tied to your old bank account. For example, if your paycheck is directly deposited into your old account, switch to a direct deposit at the new bank before closing the old account to avoid needing a paper check.

You may also have automatic bill pay connected to your bank account. So, before you close your account, transfer these to your new account to avoid any late fees from those services.

Step 4: Transfer your balance

After you've canceled your automatic transactions, it's time to withdraw the majority of your remaining balance and move it to your new account. It’s a good idea to contact the old bank directly to ensure you’ve collected all of the interest you are owed and that the account is truly closed. In fact, consider this a “check it twice” item — you want to ensure the bank account doesn’t remain open!

With this strategy, you're better prepared to avoid a scenario known as a zombie account — a situation where some banks automatically reopen a closed account if a transaction occurs. 

Step 5: Make it official

Depending on your personal preferences and your bank, you could have the option of closing your bank account online, in person at a local branch or over the phone.

Some banks may require you to submit a written request. This request likely needs to include your name, address and account number. If you have multiple accounts at the same financial institution and plan to keep those accounts open, keep track of all the account numbers to ensure you close the correct bank account. 

Step 6: Get documentation

After you’ve officially closed your bank account, request a written confirmation of the account closure and details from the bank. Even if you receive a confirmation letter, it’s a good idea to call the bank and double-check. This way, you’ll be sure you didn’t miss anything, and you can avoid incurring any negative balances.

Negative balances often occur when you forget to wrap up all the loose ends of account closure. If your old account has a negative balance and becomes a zombie account, you will need to pay it in full before the bank officially closes it.

Tip: Pay any negative balances as soon as possible. That’s because a bank may report negative balances, which may impact your ability to open a bank account in the future and can show up on your credit report (and potentially hurt your credit score).

Step 7: Review your final statement

When you receive your last statement, don’t toss it in the trash. Closely review it to confirm there aren’t any unexpected or unfamiliar transactions. If something doesn't match your memory or records, contact your old bank to resolve the discrepancy immediately.

And that’s it! Once you’ve completed these seven steps, your bank account is officially closed, and you’re free to move on with no strings attached. Closing out a bank account can seem intimidating, but if you practice due diligence and care, you can move on to an account that’s better suited for your financial habits.

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