Check-Up: Time To Close Some Accounts
Enough is enough — I have too many bank accounts. This has been something I have been somewhat aware of for a while, but it was not until I recently started reevaluating my personal finance choices that I decided it was time to do something about it.
So, partially inspired by Clever Dude from earlier this year, I have decided to go through and close many of the bank accounts that I am no longer actively using.
Why Close Accounts?
The rationale for closing some of my bank accounts is pretty simple:
- Too Much of a hassle — Many of these accounts require some sort of activity to remain free of maintenance service fees; while I have done a good job of staying on top of them up until now, it is inevitable I am going to slip up at some point. It has become too difficult to keep so many accounts fee-free.
- Too confusing to track – Even using a website like Yodlee or Mint, it is difficult to keep track of money spread across so many accounts. Many of my dormant bank accounts require a few hundred dollars to be kept in them, and as a result it can be difficult to know exactly where all of my money is.
- Too complicated — Finally, even setting aside any concerns over fees or tracking, it just makes things feel complicated to have so many accounts. I am hoping that closing a few of these accounts will result in some much needed finance simplification.
Any Reason Not To?
Before embarking on this task, I briefly considered whether there were any reasons to keep some of these accounts open, and two reasons came to mind. First, it is nice to have a variety of banks you can use for branch services or ATM access for free. Sometimes you need quick cash or to deposit a check, and having bank accounts open at the major national banks can help make this easier. Second, it certainly doesn’t hurt to keep a relationship with many of these major banks, as you never know when it might come in handy.
Also, as a commenter pointed out in a previous entry, it might not be a bad idea to take some of the free accounts and use them for some sort of targeted savings or spending. This is not a great solution when you are dealing with accounts that have potential fees, but is a very good idea to consider for accounts that are completely free. You already have the account, why not use it if you can?
My Situation
Those reasons notwithstanding, I think it is in my best interest to close some of these accounts. Many of the bank accounts I have active were opened for sign-up bonuses or promotions and have outlived their purpose, especially the instances where I have multiple accounts at the same bank.
Currently, I have:
- Over nine checking accounts at major national banks, including more than one checking account at two different banks. I plan on keeping my accounts open at Bank of America, Citibank, and Chase, as I like the branch access, but the rest are likely to be shut down.
- Two online savings accounts. Since these have no minimum balance, instead of closing one, I am likely to just keep a few dollars in it. While I am not a fan of rate chasing, I do not see any harm with leaving a few dollars in an account to keep it open.
- Two savings accounts at traditional banks. These were both opened for promotions, and have since outlived their usefulness; the interest offered is pitiful compared to what you get at someplace like HSBC Direct or ING Direct. No point whatsoever in having them.
Closing the Account
I am the first to admit that I am not a big fan of having to interact with customer service agents at banks, as I do not like being pressured into trying to change my decision. I guess I am a bit of a coward in that regard. Especially given that I am not in a particular rush to close these accounts, I have opted to send a written request to most of the banks.
While the letter varies depending on circumstance, I usually follow a general template. This is the letter I used when closing two of my three accounts at a particular bank.
At your earliest convenience, I request that you close the following two accounts in my name:
- Savings Account XXXX XXXX XXXXX XXXX
- Checking Account XXXX XXXX XXXXX XXXX
As part of this consolidation, please transfer any remaining funds in those two accounts to my primary checking XXXX. My debit card should remain active and attached to my primary checking. Also, please insure that the scheduled monthly transfer from my checking to savings ceases. At this time, all automated deposits into these two accounts have been halted.
Please note that I am closing these accounts simply because I no longer have a need for the extra accounts; I remain quite happy as a customer.
I appreciate your prompt attention to this matter.
In instances where I am closing my only account at a bank, and therefore can’t transfer my money anywhere in the bank, I usually transfer as much out as I can before the request, and then ask that they issue me a check or money order for the remaining account to my home address. While I realize that doing this by writing is not the most expedient way of closing accounts, it is the easiest for me and should result in it getting done within a few weeks.
A Happier Life?
My hope, then, is that by taking these steps, I will be able to stay on top of my active bank accounts much better than in the past. Less paperwork, especially around tax time, is definitely a good thing. Simplification.
So how do you handle extra bank accounts? When do you choose to close one as opposed to keeping it open?
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Why does one person have 9 personal checking accounts? Yes I read your “reasons” but it still seems a bit absurd. Oh well. Perhaps you have enough to put the max FDIC insured amount in 9 different accounts but since they just increased it from 100k to 250k you can close a few. Could you spare $25k?