5 things to keep in mind before closing a savings account

People often find themselves opening several savings accounts, either to get a higher interest rate on their savings, by changing jobs, or to take advantage of different savings account facilities. Once their requirement is met, people withdraw funds and stop using these accounts. These accounts may incur charges if funds are not maintained in the account. It is therefore in the interests of all parties to close the savings account if the account holder no longer intends to use the account.

However, there are a few things to keep in mind before closing a savings account. Let’s take a closer look at some of these important points.

1. Check account balance and download statement

Before closing a particular savings account, you should check your account balance and download all possible statements for future reference. Your statement could be helpful when filing the tax return. If you close your account without saving the account statement, you may provide inaccurate information when filing the ITR.

2. Cancel automated payments and standing instructions

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

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3. Check account closing fees

There are various bank accounts for which account holders may have to pay account closure fees. This mainly happens when the account is closed within a year of opening the account. However, if the account is closed after one year of opening, no closing fee is charged. 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 an account closing fee. You must refrain from closing your account if this period has not ended.

4. Unlink your savings account from various portals

People link their bank accounts to the EPFO, income tax department, etc. to benefit from the services of these institutions. “If you do not link your bank account to EPFO, you will not be able to benefit from various online services such as partial withdrawal, EPF transfer, etc. Similarly, if you do not provide your bank details in your form tax return, your ITR will not be deposited.If you have already provided the account number of the savings account to be closed, you must update another account number before closing the existing account,” says Aggarwal.

5. Update savings account details for mutual funds

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