Did you know that your bank can also charge you when you close your account within a particular time period?
When it comes to maintaining monthly average balance (MAB) charges, banks are quite strict about it. But did you know that your bank can also charge you when you close your account within a particular time period?
For instance, if you close the account within a year of opening the account, additional account closure charges are levied by the bank. Banks charge account closing charges if the account holder closes the bank account within a certain period of time.
Generally, if an account is closed within 14 days of the opening of an account, banks don’t charge any additional charges. However, any closure of the account after 14 days but before a year might attract account closure charges. Also, closure of an account after 1 year normally does not attract closure charges.
For instance, account holders with the State Bank of India (SBI) do not have to pay any account closure charges in case a person closes the bank account after 1 year. Wherein, earlier the bank used to levy a charge of Rs 500 along with GST, if an account holder closed his/her bank account even after 1 year of opening it. Those who close the bank account within 1 year of opening will still have to pay charges. No change has been made for such customers. Also, note that charges will not be levied by the bank if a deceased person’s account is closed, while earlier the bank used to charge Rs 500 along with GST in such cases.
You can also avoid closure charges if you close the bank account within 14 days of opening it. In case of a current account, mostly, all banks levy account closure charges ranging between Rs 500 to Rs 1,000 in case the account is closed after 14 days. Experts say account closing charges are levied to recover the cost banks incur while opening an account in terms of account opening kit, checkbook, and debit card.
RBI guidelines on charges
The Reserve Bank of India (RBI) does not have any specific guidelines on closure charges and it is totally up to the discretion of the bank, like many other service charges. However, RBI has asked banks to ensure that account holders with a low volume of activities should not be penalized while fixing charges.
Account closing process (The closing process varies from bank to bank)
- Withdraw the full amount of money that you have in your bank account.
- Before opting to close your bank account, de-link the account if it is being used as a registered bank account for any loans, investments or bill payments.
- Get in touch with your bank or visit your nearest branch and fill up the account closure form.
- You also need to provide another bank account number while filling up the form, in order to transfer money before the account is closed.
- If your account is a dormant account, then you will have to first activate it to close it and submit the closure form.
- You also need to surrender your debit card along with any unused cheque leaves, and a duly signed letter or an application for closure of the account.