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Forum Post: Closing Bank Account Will Cost You, Group Finds

Posted 5 years ago on June 1, 2012, 9:10 a.m. EST by LeoYo (5909)
This content is user submitted and not an official statement

Closing bank account will cost you, group finds

Want to close your bank account? It could cost as much as $55, consumer group finds

By Pallavi Gogoi, AP Business Writer | Associated Press – Wed, May 30, 2012 5:43 PM EDT

Want to close your bank account? It could cost you as much as $55.

In a survey of the practices of the 10 largest banks in the country — including JPMorgan Chase, Bank of America, Citibank and Wells Fargo — policy and advocacy group Consumers Union found that people who want to close their accounts at big banks and switch to a smaller bank can face costly obstacles.

"Banks have added all sorts of fees on basic checking accounts, which has raised alarm bells," said Suzanne Martindale, staff attorney for Consumers Union. "But when you hit breaking point and want to move your money, guess what you encounter: more fees."

Consumers Union said none of the 10 banks will make a free same-day electronic transfer, and all charge for wire transfers or certified checks. Certified checks can cost up to $10 and wire transfers $30.

BB&T and Citibank charge a $25 fee if the account is closed within 90 days, while US Bank, HSBC, and PNC Bank charge customers a $25 fee to close an account that has been open for fewer than 180 days.

The survey was commissioned after the public furor over Bank of America's plan to start charging its customers $5 for using debit cards. Bank of America backed off after many organizations, including Consumers Union and Occupy Wall Street protesters, called on Americans to transfer accounts from large banks into smaller community banks.

A survey of customers at the top 10 banks by consulting firm cg42 in November found that one in five customers actively considered switching accounts. Consumers Union said it soon started hearing from its members that wasn't easy: Not only did it cost money, but it also cost a lot of time.

Opening an account at another bank can take a few days or up to two weeks for all the paperwork to be completed. Re-routing automatic payments and direct deposits into a new account can take four to six weeks and can be a very intimidating and complicated process for some consumers, the group said.

Banks sometimes reopen old accounts after they have been closed by customers.

Chase reopens an account if the bank receives a deposit. Consumers Union said that could easily happen if a direct deposit isn't re-routed in a timely manner. Bank of America's policy is to reopen accounts if any activity hits the account.

Chicago business owner Mark Henderson said he closed his account about 18 months ago and kept receiving statements with a service charge every month saying there wasn't enough money in the account.

After calling several times and telling the bank's customer service representative that the account was closed, Henderson said, he gave up.

"Now I just tear the statement when it comes," Henderson said.

Bank of America spokeswoman Betty Riess wouldn't comment on Henderson's experience. She said the bank advises customers who are closing accounts to allow time for pending payments and deposits to clear the account.

"If we receive a deposit or credit to the account after it has been closed, we may re-open the account to accept the item, and the account could be subject to associated fees. We disclose this to customers," Riess said.

Consumers Union warns that customers can end up owing hundreds of dollars in penalty fees or even a monthly maintenance fee if a re-opened account falls below what is needed to avoid such a fee.

Consumers are at risk of more penalty fees after they switch banks. If merchants and other billers charge for late payments for delays while re-routing automatic payments, the previous bank may charge an overdraft fee on an empty account or for a bounced check.

The 10 banks surveyed are Bank of America, BB&T, Chase, Citibank, HSBC, PNC, SunTrust, TD Bank, US Bank and Wells Fargo.

As part of the study, the group sent 16 secret shoppers into branches around the country to ask how to close an account and reviewed online fee schedules and account disclosures, tracked news developments, and collected consumer stories.



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[-] 2 points by Nevada1 (5843) 5 years ago

Big banks stink. Now at local credit union, and so happy.

[-] 2 points by gestopomillyy (1695) 5 years ago

so go get the money in cash as in a cashiers check. are you all lazy?

if the bank pays out for automatic drafts from a closed account, thats the banks fault not yours

[-] 1 points by toukarin (488) 5 years ago

It used to be that it was a privilege, not a right for banks to hold our money and use it for loaning or investment and suchlike.

It used to be our right, not our privilege to take it back whenever we wished without any fees at all.

If all you got is a checking account... might as well close it and use cash as often as you can... keeps you out of their system...

[-] 1 points by freewriterguy (882) 5 years ago

ya this happened to me, I tried to close a wells fargo account by taking all my money out, and pending automatic drafts kept coming in for 3 days afterwards, "keeping my account open" adding about 70 dollars of overdraft fees, I had to pay them 70 dollars to close my account in effect. Really we the people should be able to close our account immediately and without question. End of story.

[-] 1 points by LeoYo (5909) 5 years ago

The first time I closed a bank account, I wrote a check to my aunt equivalent of the remaining amount so she could cash it and give me the money. I then closed my account with nothing in it.

The last time I closed a bank account, I asked if there were any closing fees and there weren't so I proceded. However, they wanted to know the reason behind my action as if they were entitled to know. When I made it apparent that there would be an immediate disturbance for delaying my final withdrawal, I got my money.

[-] 1 points by fairforall (279) 5 years ago

Understand fees and the fine lines before you open the account. THis is really a personal responsibility issue.

[-] 1 points by DoubleVoice (115) 5 years ago

More bullshit from the greedy bastards! Go OWS! Take these banks out!