You won't face a penalty for closing a checking account itself, but you may face fees if you close it the wrong way

Closing a checking account does not damage your credit score. The bank does not report account closures to credit bureaus, so the act of closing carries no direct penalty. What does cost you money is closing an account while you still owe the bank—whether that's an outstanding balance, unpaid fees, or a negative balance you haven't settled.

The other risk is timing. If you close an account before scheduled automatic payments clear, those payments bounce, and you'll face overdraft fees from both your bank and whoever you owed the money to. A utility company or loan servicer may also charge you a returned-payment fee. That's not a penalty for closing the account; it's a consequence of the payment failing.

Key Takeaways

  • Closing a checking account does not affect your credit score because banks do not report account closures to credit bureaus.
  • You will owe any outstanding balance, unpaid fees, or negative balance the bank is holding when you close, and the bank can pursue collection if you don't pay.
  • Automatic payments scheduled before your closure date may bounce after you close, triggering overdraft fees from both your bank and the company you owed money to.
  • Some banks charge an early closure fee if you close within a set window (usually 90 to 180 days), so check your account agreement before you proceed.

When banks charge you for closing early

A small number of banks impose an early closure fee if you close an account within a certain timeframe—typically 90 to 180 days of opening it. This is not universal; many banks do not charge this fee at all. The fee, when it exists, usually ranges from $25 to $100, though the exact amount varies by institution.

You'll find this fee listed in your account agreement or fee schedule, often under a heading like "Account Closure" or "Early Termination." If you're unsure whether your bank charges one, call the customer service number on the back of your card or log into your online account and search the fee schedule. Knowing this before you close saves you a surprise charge.

If you've already closed the account and discovered a fee you didn't expect, contact the bank directly. Some banks will waive the fee if you ask, particularly if you've been a customer for a long time or if the fee wasn't clearly disclosed.

Outstanding balances and what the bank can do

If your account has a negative balance when you close it—meaning you owe the bank money—the bank will not straightforward forgive it. The bank can hold the debt and attempt to collect it, either by contacting you directly or by selling the debt to a collection agency. A debt sent to collections will appear on your credit report and damage your score.

Unpaid fees also count. If you've incurred overdraft fees, monthly maintenance fees, or other charges that you haven't paid, those remain your responsibility even after you close the account. The bank can pursue these just as it would pursue a negative balance.

The best approach is to bring your account to zero or positive before you close it. If you have a small negative balance, ask the bank whether you can pay it over the phone before closing. If the balance is larger, work out a payment plan with the bank rather than straightforward closing the account and hoping it goes away.

How automatic payments can create problems after closure

Automatic payments are the most common source of trouble when closing a checking account. If you have bills set to withdraw from your old account after you've closed it, those transactions will fail. The payment bounces, and you face multiple fees: an overdraft or insufficient-funds fee from your old bank, plus a returned-payment fee from the company you owed money to (your utility company, insurance provider, loan servicer, etc.).

Some companies charge $25 to $35 per returned payment. If you have three automatic payments scheduled and all three bounce, you could face $75 to $105 in fees from the payee alone, on top of what your bank charges.

Before you close, log into your bank's website and review your recent transactions to identify every automatic payment. Then contact each company—your electric company, insurance agent, loan servicer, subscription services—and update your payment method to your new account. Do this at least a week before you close the old account to allow time for the changes to process.

The difference between closing and leaving an account dormant

Some people close an account to avoid fees, but there's a middle ground: leaving the account open with a zero balance. This avoids early closure fees and keeps the account available if you need it later. The downside is that some banks charge a monthly maintenance fee even on dormant accounts, so you'd be paying to keep it open.

Check your account agreement. If your account has no monthly fee and no minimum balance requirement, leaving it open costs you nothing. If it does charge a monthly fee, closing it makes more sense—just make sure you've handled the outstanding balance and automatic payments first.

What happens to checks and debit cards after closure

Once you close an account, any checks you've written against it will bounce if they're deposited after the closure date. The person who deposited the check faces a returned-check fee, and you may face a fee from your bank as well. If you've already distributed checks, contact the recipients and ask them to hold off on depositing until you've given them a new account number, or ask them to destroy the checks.

Your debit card will stop working when ready or within a few days of closure. If you have a card linked to the account, the bank will deactivate it. Any attempt to use it after that will be declined. This is not a penalty; it's straightforward how the system works.

Frequently Asked Questions

Will closing a checking account hurt my credit score?

No. Banks do not report checking account closures to credit bureaus, so closing an account has no direct impact on your credit. However, if you close the account while owing money and the bank sends the debt to a collection agency, that collection account will damage your score.

Can a bank refuse to let me close my account?

A bank cannot legally prevent you from closing an account, but it can require you to pay any outstanding balance or fees before processing the closure. If you refuse to pay, the bank can pursue collection. You have the right to close, but you don't have the right to close without settling what you owe.

What if I close my account and then a check bounces?

You remain responsible for the bounced check. The person who deposited it will face a returned-check fee from their bank, and they may pursue you for payment. You may also face a fee from your old bank for the returned item. Contact the recipient and offer to cover their fee.

Do I need to wait a certain amount of time before closing a new account?

Some banks charge an early closure fee if you close within 90 to 180 days of opening, but this varies by bank. Check your account agreement. If there's no early closure fee listed, you can close whenever you want. If there is one and you want to avoid it, wait until the window has passed.

What should I do with leftover checks after I close?

Destroy them or contact anyone you've given checks to and ask them to return them or confirm they won't deposit them. Any check deposited after your account closes will bounce, and you'll face fees. It's easier to handle this before closure than to deal with bounced checks afterward.