Closing your bank account? Here is how you can avoid charges

While starting a job and joining a new company or while changing organizations, newer bank accounts get opened. And after leaving each organization we are left with an additional savings account. Each bank account has a monthly average balance that needs to be maintained and banks are quite strict about it. Hence, to avoid having so many bank accounts and pay non-maintenance charges, most people opt to close it but that too comes with additional charges. Banks also charge account holders additional charges, when they close their account within a particular time period.

For instance, if an account is closed within a year of opening, the bank levies additional account closure charges. Usually, banks don’t charge any additional charges, if the account is closed within 14 days of the opening of an account. However, closure of the account between 14 days of opening the account and a year after opening the account may attract account closure charges. Generally, closure of an account after 1 year does not attract additional charges.

State Bank of India (SBI) does not charge its account holders any account closure charges, in case one closes one’s SBI account after 1 year. Even after 1 year of opening a bank account, if an account holder closed his/her bank account earlier, SBI used to levy a charge of Rs 500. However, if you close your account within 1 year of opening the account, you still will have to pay charges. No change has been made for account closure within a year of opening an account.

Industry experts say these account closing charges are levied by banks to recover the cost incurred by the bank while opening an account with an opening kit, which includes a debit card and checkbook. Also, earlier the bank used to charge Rs 500 along with GST if a deceased person’s account is closed, which is no more levied by the bank.

If you feel you are unhappy with the bank services, you can close the bank account within 14 days of opening it and also avoid closure charges. Generally, banks levy account closure charges ranging between Rs 500 to Rs 1,000 in case of a current account is closed after 14 days.

It is totally up to the bank’s discretion of the service charges they charge account holders and the Reserve Bank of India (RBI) does not have any specific guidelines on closure charges.

Here is how you can close your bank account even though the closing process varies across banks

  • You need to withdraw the full amount of money from your bank account.
  • You need to de-link your bank account if it is being used as a registered bank account for any loans, investments or bill payments, before going forward to close your account.
  • To close your bank account, generally, account holders are needed to visit their nearest branch and fill up the account closure form.
  • While filling up the form, you need to provide another bank account number, so that any money can be transferred before closing the account in your current bank.
  • Also, you need to first activate your account if your account is a dormant account. Activate your dormant account and then submit your closure form.
  • Along with a duly signed letter or an application for closure of the account, account holders also need to surrender their debit card along with any unused cheque leaves.

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Author: Sham