Closing a bank account in Canada can seem like a monumental task, but if you know how to go about it, the process becomes a piece of cake. Switching to a different bank, moving abroad, or consolidating finances are reasons that make you close your account, and knowledge of the procedure ensures a smooth process.
Let us walk through this guide so that closing your bank account in Canada will be smooth and hassle-free.
Reasons to Close a Bank Account
Before discussing the process, there must be compelling reasons to close your bank account. Here are some possible ones:
- Switching to a Better Bank: Better interest rates, lower fees, and great customer services could be the reasons.
- Relocation: It could be for a move to another country or province where you will not be around to take care of the existing account.
- Consolidation of Accounts: Reduce the number of accounts you hold.
- Dissatisfaction: Poor customer service, hidden fees, or limited online banking options can drive customers to close their accounts.
How to Close a Bank Account in Canada
Review Your Account
Before initiating the closure process, review your account details carefully. Take note of any outstanding transactions, pending deposits, or auto-debits that might still be active. Ensure that your account has a zero balance or enough funds to cover any pending charges.
Clear Pending Transfers
Be sure that all outstanding checks, direct deposits, and automatic bill payments clear your account. Advise the following on an account closing in advance so that there are no interruptions in their service:
- – Your employer
- – Utility companies
- – Other subscription services
Transfer Your Funds
Once you confirm there are no outstanding transactions, transfer any balance to a new bank account you wish to fund through the following methods:
- Easy Fund Transfer via Electronic Funds Transfer (EFT): It is fast and convenient.
- Interac e-transfer: Better for smaller sums.
- Cash Withdrawal: If the balance is small, withdrawing cash may be an option.
Update Banking Details
Provide the new account in case of automatic payments such as private mortgage, rent, or subscription payments to prevent late charges and penalties.
Contact the Bank
Typically, banks demand account closure requests be made in person, over the phone, or via written communication. You may have to go to a branch or do it online, depending on the bank. Prepare to give the following information:
- Account details
- Identification, which could be a passport, driver’s license, etc.
- Security verification, like a password or PIN
Request Account Closure Confirmation
Once you have your request to close, you may ask for a letter or an email to be returned that verifies that the account is indeed closed. The document may help resolve disputes that arise in the future.
Shred Unused Cheques and Debit Cards
When the account has been closed officially, destroy all unused cheques by shredding them, and destroy your debit card to prevent theft and other malicious uses of your information.
Special Situations
Closing a Joint Account
If the account is held jointly, then all the account holders have to agree on closing it. Some banks demand that both parties be present in the bank before closing.
Closing Accounts with a Negative Balance
If your account has a negative balance, you must settle the debts before closing it.
Dormant Accounts
If your account has been inactive for a long period, the bank may classify it as dormant. You may need to reactivate it first before closing.
Fees Associated with Closing a Bank Account
Some Canadian banks may charge a fee for closing an account, particularly if it is done within a short period after opening. Always check the bank’s policy to avoid unexpected charges.
What Happens After Account Closure?
After your account is closed:
- Ensure that no unauthorized charges are made.
- Check your credit report to ensure that your banking details are up-to-date.
- You may wish to notify credit bureaus if the account was linked to any loans or credit products.
Conclusion
Closing a bank account in Canada is relatively simple if done the right way. The steps outlined above ensure that you have a smooth transition without any interruptions to your financial activities. Always confirm with your bank about any specific requirements and keep records of the closure for future reference.
