Closing your bank account? 5 charges to check before you leave
Some private sector banks charge a higher fee if you close the account within six months of opening. Always check your bank's individual schedule and charges before requesting closure.
A routine closure could cost you a great deal more than you think - Closing a bank account seems to be a simple clerical task, but it could cost and entail hassles – particularly if you've let some time lapse since you last made a withdrawal or failed to untangle automatic payments. From early closure penalty to sneaky card charges, a range of fees could creep into your account unseen prior to the account closure. To close neat without extra charges, watch out for the following.
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1. Account closing charges - All Indian banks allow you to close a savings account for free—after a certain minimum period, usually a year. If you close the account earlier than this, you may be charged an early closure fee between Rs 200-1,000, depending on the bank. For example, some private sector banks charge a higher fee if you close the account within six months of opening. Always check your bank's individual schedule and charges before requesting closure.
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2. Minimum balance penalty - If you have already stopped using your account and have kept it in an inoperative state without even maintaining the required minimum average monthly balance, the bank might impose penalties before allowing you to close it. The penalties differ from Rs 150-600 based on the type of account as well as the deficit. You may be required to pay these charges before the account is closed.
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3. Debit card annual charge and charges on cheque book annually - If your account involves a linked debit card that you pay an annual fee for, make sure you're not charged again upon closing the account. Banks have the authority to automatically debit the annual maintenance fee on a given date—whether or not you've used the card. And if you've purchased additional cheque books that were unused, you might also be charged for that. It is prudent to check your statement and settle any pending cards or stationery charges in advance.
4. ECS and auto-debit instructions - Have you linked this account for payment of EMIs, utility bills, SIPs, or credit card bills? Failure to close your account without cancelling or changing your ECS and auto-debit instructions will lead to bounced payments and charges from service providers. Worse, bounced EMIs impact your credit score. It’s best to de-link and shift all auto-debit mandates to your new account at least a month in advance to minimize any financial strain.
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5. Reactivation charges for inactive accounts - Sometimes one can forget that they have dormant accounts and try closing them after 2 years or more—only to discover the account has been marked as dormant. You can request for the account to be reactivated by going to the branch or providing your KYC information before it is closed. Reactivation can be charged by paying a small fee with minimal administrative hassle. If your account is older than 2 years, you should check its status.
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6. Close it cleanly—no extra costs - Closing a bank account is not as simple as leaving it in a cloud of dust. Check and pay these five charges and you'll avoid unwanted deductions, declined transactions, or surprise penalties. Always demand written confirmation of closure and download your final account statement for proof. A little preparation will make sure you are able to close your account free of charges and free of stress.
