Closing a checking account usually does not hurt you, but a few specific situations can cause real problems
Closing a checking account on its own carries no penalty from the bank and does not damage your credit score. Banks do not report account closures to credit bureaus. The consequences come only if you close the account while money is still owed, if you have pending transactions, or if you close it in a way that leaves bills unpaid.
The most common issue is bounced checks or overdraft fees that hit after you have already closed the account. If you owe the bank money when you close, they will pursue collection. If you leave automatic payments running to a closed account, those payments fail and you may face late fees from the creditor or utility company instead.
Key Takeaways
- Closing a checking account does not affect your credit score or create a record that future banks can see.
- Bounced checks and overdraft fees can still arrive weeks after closure if transactions were pending when you closed.
- Automatic bill payments sent to a closed account will fail, and the creditor will charge you a late fee, not the bank.
- If you owe the bank money at closure, they can pursue collection and may report the debt to a collection agency.
- ChexSystems records of unpaid overdrafts or fraud can block you from opening accounts at other banks for up to five years.
Bounced checks and overdraft fees after you close
Checks you wrote before closing can clear days or weeks later. If the account is already closed when a check arrives, it bounces. You will owe the check writer a bounced check fee (usually $25 to $35), and the bank will charge you a returned item fee as well. The original payee may also charge you for the bounced check.
The same applies to debit card transactions and ACH transfers that were pending. If you close the account before they post, they fail and trigger overdraft or returned item fees. These fees can arrive in your mail weeks after you thought the account was settled.
To avoid this: wait at least two weeks after your last transaction before closing, and review your account for any pending charges. Ask the bank to hold the account open a few extra days if you are unsure.
Automatic payments that stop working
If you have set up automatic bill payments to a closed account—utilities, insurance, loan payments, subscriptions—those payments will fail. The creditor will not know the account closed; they will only see that the payment was rejected. They will then charge you a late fee and may report the missed payment to credit bureaus.
This is different from a bank fee. The late fee comes from the creditor, not the bank. A missed utility payment can also result in service disconnection. A missed loan or credit card payment can lower your credit score.
Before closing, log into each creditor's website and update your payment method to your new account, or switch to a different payment method entirely. Do this at least a week before you close the old account.
Money owed to the bank at closure
If your account is overdrawn when you close it, or if you owe overdraft fees that have not been paid, the bank will not simply forgive the debt. They will pursue collection. This means they may send the debt to a collection agency, which will contact you by phone and mail.
A debt sent to collections can stay on your credit report for seven years and will lower your credit score. The bank can also sue you in small claims court to recover the amount, though this is less common for small overdrafts.
If you owe money, pay it before closing. If you cannot, contact the bank and ask about a payment plan or settlement.
ChexSystems records that block future accounts
ChexSystems is a banking history database that most banks check before opening a new account. If you close an account with unpaid overdrafts, fraud, or a pattern of bounced checks, the bank may report it to ChexSystems. This record stays for up to five years and can prevent you from opening a checking account at another bank.
You can request your ChexSystems report for free at chexsystems.com. If you see an error, you can dispute it. If the record is accurate but old, it will eventually fall off.
Some banks and credit unions are more lenient with ChexSystems records than others. If you have been reported, look for banks that specialize in second-chance accounts, though these often come with higher fees.
Closing an account with a negative balance
If you close an account that is negative—meaning you owe the bank money—the bank will deduct the amount from any other accounts you have with them. If you have no other accounts, they will send the debt to collections.
Some banks will also freeze your ability to open new accounts with them until the debt is paid. This is a separate issue from ChexSystems and applies only to that bank.
If you are closing because you are unhappy with the bank, make sure the account is at zero before you close. If it is negative, ask the bank for a payment plan or settlement before you leave.
How to close without consequences
The safest way to close a checking account is to move your money to a new account first, then wait for all pending transactions to clear. This usually takes one to two weeks. Once you see no new activity, call the bank and ask them to close the account. Confirm in writing that the account is closed and that you owe nothing.
Before closing, update all automatic payments and direct deposits to your new account. Check your account for any pending checks or transfers. If you have a debit card linked to the account, destroy it or ask the bank to deactivate it.
If the bank tries to charge you a closure fee, ask them to waive it. Many banks will if you ask. If they refuse and the fee is significant, consider whether it is worth the cost to leave.
Frequently Asked Questions
Will closing a checking account hurt my credit score?
No. Closing a checking account does not appear on your credit report and does not affect your credit score. Credit scores are based on credit history—loans, credit cards, and payment history—not on bank accounts. Only if you leave a debt unpaid and it goes to collections will your credit be affected.
Can a bank prevent me from opening an account elsewhere after I close?
The bank itself cannot prevent you from opening an account at another bank. However, if the bank reports you to ChexSystems for unpaid overdrafts or fraud, other banks may refuse to open an account for you. This record lasts up to five years. You can check your ChexSystems report at chexsystems.com and dispute any errors.
What happens to pending direct deposits after I close the account?
Direct deposits sent to a closed account will be rejected and returned to the sender. Your employer or the government agency will be notified that the account is closed. You will need to provide a new account number to resume deposits. This can delay your paycheck or benefit payment by one to two pay periods.
Do I have to pay overdraft fees if I close the account?
Yes. Overdraft fees that were charged before you closed the account remain your responsibility. The bank can pursue collection if you do not pay. Fees charged after closure due to pending transactions also remain your responsibility. The only way to avoid them is to ensure the account is at zero and has no pending transactions before closing.
What if I close the account and then a check bounces?
You will owe a bounced check fee to the bank and a bounced check fee to the person or business you wrote the check to. The bank may also report the bounced check to ChexSystems. This is why it is important to wait at least two weeks after your last transaction before closing, and to review pending transactions first.