What Happens to Your Bank Account When You Shut It?

If you have reached the point of wanting to close your bank account, there are some questions you might want answered. Most of these questions might include “does closing down my account affect my credit score” or “can I reopen a closed bank account” and we are going to get down and answer some of them for you.

How To Close Your Bank Account

There are steps to follow when you need to close your bank account. The first thing you need to do is to contact your bank or your financial institution of choice to make sure your account is not running on a negative.

They will also inform you whether you have any pending cheques that need to be paid out or any pending transactions that will bring the account to a negative.

If you are closing it down to move to another financial institution, you can move all your deposits or pending transactions and ensure to leave some money for about a week. If there are no transactions then, you can have the bank shut the account down.

If your bank lets you know there are negative balances, you should handle it as soon as possible. Account closure is private information, and it is not listed on your credit history if you have no issues at the point of closure.

How Can Closing Your Bank Affect Your Credit?

Technically it does not if you do not have a negative balance. In such a scenario, you need to look into the balance and take care of it immediately. If you do not, the financial institution will send a collecting agency to handle you, sometimes not in the best fashion.

If you keep letting it accrue, this will have a negative impact on your credit score. In fact, if the collection agency is hired to sort you out, the collection account will remain as part of your negative credit score for seven years after the date of your delinquency.

In some instances, unpaid bank balances are will end up on public sites that anyone, like your potential employer, can access.

How To Keep Your Credit Healthy

Once you close your bank account, there are no direct implications on your credit score and you can take time to maintain a healthy credit profile. Pay up your debts on time, clear out negative balances, avoid overdrafts and continue to invest your savings.

If you budget and keep note of where your money goes, it becomes easy to avoid overspending on your credit card and going into debt. With a healthy credit score, you get to qualify for better loans, some jobs and other financial services such as mortgages.

If you are looking to close your bank account, it would be wise of you to contact your relationships manager for the best way forward. In some instances, you can end up not closing up the account after all.

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