A bank savings account has become a necessity in today’s world of online transactions. From paying bills to receiving salaries, a bank account is important in managing your finances. It serves as a secure place to keep your money, conduct transactions for daily expenses, help you budget, and even earn interest on the balance. So, you manage your present expenditures and secure your future financial goals.
However, there may be times when you need to close an old account and open a new bank account. Maybe you are getting better features like a low savings account minimum balance, a better ATM network, better customer service, or relocating to a new place and want the new bank near you. But the question is, how does closing a bank savings account affect your credit score? Let’s find out.
Closing a bank account the right way does not affect your credit score!
Factors influencing your credit score are your loan repayment history, debt-to-income ratio, current debts, and new credit applications. So, responsibly closing a bank account may not affect your credit score.
So, how to close your bank savings account so your credit isn’t affected?
- Open a new bank account first before you close out the old one. This way, you can still access your funds and make transactions while you are making the transition. This also prevents any unnecessary financial stress caused by funds being tied up in closed accounts.
Compare the bank interest on savings accounts, as the higher the interest rate, the better you will earn on your deposits. After your new account is set up, transfer your funds and close your old account.
- Contact your bank and inquire about your bank savings account’s outstanding balances, debts, or fees. Banks levy monthly fees, annual charges, and non-maintenance charges, so make sure all orders are paid.
- Double-check and clear any pending transactions or cheques you have written before you close the account.
- Review any recurring payments that automatically get deducted from your account. Cancel or transfer those payments to another bank savings account to avoid defaults.
- If you have any subscriptions linked, cancel them all so you don’t get charged for future bills.
- To prevent missed payments and negative credit impact, verify with your bank that all automatic fees, direct deposits, and pending transactions cease after account closure.
To wrap up
Closing a bank account responsibly does not impact your credit score. However, it is important to verify that there are no negative balances, debts, or fees left with the account. You can maintain good financial health by following the tips mentioned above and monitoring your credit score regularly.
A healthy credit score makes you eligible for low-interest loans and other financial benefits. Thus, you should take the right steps to improve your credit score and build a positive financial future.