Joint bank accounts can be quite convenient because they make it easy to share expenses and monitor your finances as a team. In certain situations, however, you may find that it is no longer beneficial for you and your beneficiary to share an account.
If so, it might be time to close up the account. When you shutter a joint bank account, you are essentially ending the personal financial ties between you and the other party on the account.
This is an excellent first step if you want a clean breakup with your partner or you want to dissolve any other business or romantic relationship. It could also be your banking choice has changed. Continue reading to learn how to close a joint bank account.
Common reasons for closing a joint bank account
There are many reasons why someone might close a joint account.
Divorce or breakup
People often close joint bank accounts after separation or divorce because they want to make sure they have more control of their own finances. It can be very problematic to jointly manage finances when the two people are no longer together.
Closing the joint account can help simplify things and make it easier to control the money separately.
An uncooperative co-owner on the account
Another reason for closing a joint bank account might be due to an uncooperative co-owner who is irresponsible with their finances. This can be extremely annoying, particularly if the co-owner is careless with his or her finances and causes the other account holder to suffer financially.
If there is no way to solve the problem, it may be best to end the account and move on. At the end of the day, if both parties aren’t on the same page about money and frequently argue and fight over how to manage the finances, it’s unwise to share a bank account.
Changes in banking preference
People may also close a joint bank account due to changes in banking preferences. For example, one person in the relationship may prefer using a certain bank or credit union, while the other person prefers a different financial institution.
If the two parties are unable to agree on a bank, it can lead to friction and conflicts. In some cases, it may even be better to close the joint account and open separate accounts at the bank or credit union of each person’s choice.
Step-by-step instructions on how to close a joint bank account
Not sure what the process is for closing a joint account? Here are step-by-step instructions on how to close a joint account properly.
1. Clear all funds in the account
Make sure you have the funds for the two of you to clear the joint account before you close it. This will ensure that you are completely financially independent from each other when you sign the final paperwork.
To do so, you withdraw all the money from the account or transfer it to another account. You would also need to decide who gets what money.
2. Cancel automated transactions
Many people who close their joint accounts forget to cancel their automatic payments. This can quickly result in a problem for both parties involved. If you have any payments that are automatically debited from your checking account, you should contact those businesses and update your personal information.
Otherwise, you may incur high overdraft fees and hinder the account closing process. Review your account balance regularly, and cancel any credit cards connected to your account. Canceling automatic transactions is how you can close a joint checking account without difficulty.
3. Open up a new account
You should create a new account as soon as possible if you plan to close a joint account. It will help to keep your funds organized, and you won’t experience any problems in your normal routine.
Remember that payments may take several days to switch over your previously shared joint account to the new account, so you should avoid closing down your old account until that time.
4. Ask your bank to close the old account
The process of closing a joint bank account can vary depending on the bank’s policies and procedures. Some banks may require you to visit a branch, while others may be able to process it over the phone.
Just find out what the requirements are ahead of time. For example, who may be approved for the procedure and which documents are needed. Contact your bank to discuss the requirements for and instructions on how to jointly close a bank account.
Can one person close a joint bank account without the other person?
You may be wondering what you can do if you are both in a unique position to sign a joint bank account without the other owner’s consent. According to the Consumer Financial Protection Bureau, many banks allow you to close a joint account if both of you are account holders.
Before closing a shared checking account, be sure to notify the other party of the account. He or she may have outstanding payments or deposits that have not yet been processed. You can ensure that every transaction is completed smoothly and cooperate with the other co-owner to perfect the account before it stops operating.
Things to keep in mind when closing a joint bank account
Closing your account is quite easy. But, there are a few things you should know when you close a joint bank account to avoid confusion during the process.
Remember to get confirmation from the bank
It is important to get a written statement from your bank confirming that your account is closed. This will avoid any confusion regarding your account’s closure.
Without these credentials, you might not be able to later verify that your joint account was closed properly and incur overdraft fees related to it.
Both co-owners are liable for overdraft fees
You and your account co-owner are also both responsible for penalties that may occur. It’s also essential to be aware of this when closing a joint bank account as well. For example, if one person uses the account carelessly and incurs overdraft charges.
The bank may then close the account until one person pays off the balance. Keep in mind that missed payments can remain on your credit report for seven years, so make absolutely sure that the fees are paid on time.
Be careful about deposits
Once a joint account is closed, make sure to remind everyone involved in it not to make any deposits again. In the event that a bank receives a deposit for an account that is currently closed, it may reopen the account and charge for the service fees again.
If you aren’t aware of this, you can easily rack up overdraft fees and get into debt.
Follow this guide to close a joint bank account successfully!
Now that you understand how to properly close a bank account, you can protect your finances and your relationship with each other. However, mistakes in the process could result in debt and damage to one’s rating.
You should make sure you follow every step of the process properly so you don’t have to be left holding the bag if something should go wrong. Never hesitate to ask your bank for any questions; they will be happy to help you.