5 things to keep in mind before closing a savings account | The Financial Express

5 things to keep in mind before closing a savings account

One should keep certain things in mind before closing a savings account. Let us discuss some of these important points in detail.

5 things to keep in mind before closing a savings account
Before you close a particular savings account, you should check your account balance and download all the statements possible for future reference.

People often get multiple savings accounts opened either to earn a higher rate of interest on their savings, or while switching jobs or to avail different facilities related to savings accounts. Once their requirement is fulfilled, people withdraw funds and stop using these accounts. Such accounts may bear charges for non-maintenance of funds in the account. It is, thus, in the best interest of all parties to get the savings account closed if the accountholder does not intend to use the account any further.

However, one should keep certain things in mind before closing a savings account. Let us discuss some of these important points in detail.

1. Check Account Balance and Download Statement

Before you close a particular savings account, you should check your account balance and download all the statements possible for future reference. Your statement might be handy while filing the Income Tax Return. If you close your account without the backup of the account statement, you might end up providing inaccurate information while filing the ITR.

2. Cancel Automated Payments and Standing Instructions

People often provide standing instructions for loan EMIs, bill payments, monthly subscriptions, etc. through their savings account. “Before closing an account, one should make note of any such mandate and either cancel such automated payments or update billing details of such accounts. If there are no such mandates provided with the savings account, one can simply download the account closure form, fill in the details and submit it to the bank’s branch to close the account without much hassles,” says Gaurav Aggarwal, Senior Director, Paisabazaar.

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3. Check Account Closure Charges

There are various bank accounts where accountholders may need to pay account closure charges. This happens mostly when the account is being closed within a year of account opening. However, if the account is closed after a year of opening it, no closure charges are levied. For example, SBI does not charge if the savings account is closed within 14 days of account opening. However, if you close the savings account after 14 days and before 1 year, a penalty of Rs 500 is charged by the bank as account closure charges. You should refrain from closing your account in case such period has not been completed.

4. De-link your Savings Account from Various Portals

People link their bank accounts with EPFO, Income Tax Department, etc. to avail services from these institutions. “If you do not link your bank account with EPFO, you will not be able to avail various online services such as partial withdrawal, EPF transfer, etc. Similarly, if you do not provide your bank account details in your Income Tax Return form, your ITR will not be filed. If you have already provided the account number of the savings account to be closed, you should update another account number before closing the existing account,” says Aggarwal.

5. Updating Savings Account Details for Mutual Funds

When one redeems the investment in a mutual fund, the amount first gets transferred to the AMC’s account. It is then routed to the investor’s account. If you have provided the details of the account that you intend to close, your redemption will be put on hold. It will not be cleared until you add the new account details which may lead to a delay in receiving the payment.

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