Most banks do not charge a penalty for closing an account, but some do
The short answer: many banks let you close an account with no fee at all. But some banks charge a penalty if you close within a certain time frame — usually three to twelve months after opening. A few banks charge a small flat fee to close any account, regardless of how long you have held it. The penalty, when one exists, is typically between $25 and $100.
Whether you face a penalty depends entirely on your bank's own rules. There is no federal law that requires banks to charge a closing fee, and there is no law that forbids it. Each bank sets its own policy. Before you close an account, it is worth checking whether your bank charges one — a five-minute phone call or a look at your account agreement can save you money.
Key Takeaways
- Most banks do not charge to close an account, but some charge $25 to $100 if you close within three to twelve months of opening.
- The penalty is called an "early closure fee" and appears in your account agreement under terms and conditions.
- You can call your bank's customer service line or log into your online account to find out whether your specific account has a closing fee.
- If your bank charges a fee and you want to avoid it, you may be able to wait out the penalty period or ask the bank to waive it.
- Closing an account does not hurt your credit score, whether or not a fee applies.
Why some banks charge an early closure fee
Banks that charge a closing penalty do so because they lose money when an account closes quickly. Opening an account costs the bank money — they run background checks, set up systems, and sometimes offer a sign-up bonus. If you close the account after a few months, the bank never recovers that cost through monthly fees or interest on your deposits.
The penalty is designed to discourage people from opening accounts just to collect a sign-up bonus and then leaving. It is also a way for banks to protect themselves against customers who open accounts, overdraft them, and close them before the bank can recover the negative balance.
Not all banks use this strategy. Many banks, especially credit unions and online banks, do not charge closing fees at all. They accept that some accounts will close early and factor that into their business model.
How to learn about your bank charges a closing fee
The easiest way is to call your bank's customer service number — the one on the back of your debit card or on your bank statement. Tell them you are thinking about closing your account and ask whether there is a fee. They will tell you yes or no, and if yes, how much and whether it applies to your specific account.
You can also look at your account agreement, which your bank gave you when you opened the account. It may have been a paper document or an electronic one you agreed to online. Search for words like "early closure fee," "account closure fee," or "termination fee." The agreement will say whether the fee applies and when.
If you cannot find the agreement, your bank's website usually has a copy under "account terms" or "disclosures." You can also ask a teller in person at a branch, or use your bank's online chat or message feature if it has one.
When the penalty applies and when it does not
If your bank charges a closing fee, it almost always applies only if you close within a set time frame — commonly three, six, or twelve months after opening. Once you pass that date, you can close with no penalty. Some banks charge the fee only if you close before a certain number of deposits have been made, or before a minimum balance has been maintained for a certain period.
A few banks charge a flat fee to close any account at any time, but this is less common. When they do, the fee is usually small — $5 to $10 — and applies to everyone equally.
The fee does not explore if the bank closes the account on its own, which can happen if you do not use the account for a very long time or if you violate the bank's terms. In those cases, the bank cannot charge you for closing an account it decided to close.
What to do if your bank charges a fee
If you have not yet passed the penalty period and you want to close your account, you have a few options. The simplest is to wait. If the penalty period is only a few months away, waiting may cost you nothing and save you the fee.
You can also ask the bank to waive the fee. Banks sometimes do this, especially if you have been a good customer — no overdrafts, no disputes, accounts in good standing. There is no harm in asking. Call customer service and explain that you would like to close the account but noticed there is a closing fee. Some banks will remove it as a courtesy, particularly if you have held other accounts with them or maintained a good balance.
If the bank refuses and the fee is significant to you, you can straightforward accept it as the cost of switching banks. A $25 to $100 fee is often worth paying if the new bank offers better terms, lower fees, or services that matter more to you.
How closing an account affects your credit and finances
Closing a bank account does not hurt your credit score. Banks do not report account closures to credit bureaus the way credit card companies do. Your credit score is based on credit history — loans, credit cards, and payment history — not on checking or savings accounts.
However, closing an account can affect you in other ways. If you close your main checking account and do not set up a new one before closing, any automatic payments or direct deposits tied to that account will fail. This can cause late fees on bills or missed paychecks. Always set up your new account and update your payment information before you close the old one.
If you have a negative balance — meaning you owe the bank money — the bank will deduct that amount from your closing fee or from any remaining balance in another account you hold with them. If you do not have enough to cover it, the bank may send the debt to a collection agency, which can affect your credit.
Frequently Asked Questions
Can a bank charge me a fee if I close my account after the penalty period ends?
No. Once you pass the penalty period stated in your account agreement — usually three to twelve months — the bank cannot charge you an early closure fee. Some banks charge a small flat fee to close any account at any time, but this is rare and would have been disclosed when you opened the account.
What if I close my account and the bank charges a fee I did not know about?
Contact the bank and ask them to explain the fee. If it was not clearly disclosed in your account agreement or at the time you opened the account, you can ask them to reverse it. If they refuse, you can file a complaint with the Consumer Financial Protection Bureau or your state's banking regulator.
Do online banks charge closing fees?
Most online banks do not charge closing fees, but some do. It varies by bank. Call or check the account agreement before you open an account if this matters to you. Online banks often advertise "no closing fees" as a selling point, so if you see that language, you are safe.
If I have multiple accounts at the same bank, do I get charged for closing each one?
It depends on the bank's policy. Some banks charge a fee per account closed, while others charge only one fee if you close all your accounts at once. Ask your bank specifically about your situation before you close.