Early Account Closure Fees At Top Banks

Nobody wants to pay an unnecessary fee, especially when you’re trying to switch to a better bank. But some banks will charge you for closing your account too quickly after opening it. These early account closure fees can cost anywhere from $5 to $50, and they’re more common than you might think.

If you’re considering switching banks for better savings rates or fee-free checking, understanding these fees could save you money and frustration.

What is an early account closure fee?

An early account closure fee is a charge that some banks impose when you close your account shortly after opening it. Think of it as a penalty for ending the banking relationship too quickly — usually within 90 to 180 days.

Banks that charge these fees will specify the terms in their account agreements and fee schedules. The fee amount and time restriction vary by institution, making it important to review these details before opening any account.

Early account closure fees at major banks

Whether they’re big banks, online banks or community banks, many banks these days don’t charge fees for closing accounts early. However, there are some banks and credit unions that will assess such a fee to customers — here’s what major financial institutions currently charge.

Major banks without early closure fees

Many of the nation’s largest banks don’t impose early account closure fees on standard deposit accounts. Bank of America, Chase, Wells Fargo and Citibank typically allow customers to close accounts without penalty, providing flexibility for consumers who need to switch banks.

Why do banks charge early account closure fees?

Banks invest significant resources when you open an account — administrative processing, system setup, marketing costs and staff onboarding. When you close an account quickly, banks often can’t recover these acquisition costs through regular account activity.

Early closure fees help banks offset these costs and encourage customers to maintain their accounts longer. While this makes business sense for banks, these fees can limit your ability to switch to institutions offering better rates or services.

The key is understanding these fees upfront so you can make the right decision on where to bank.

Common reasons people close accounts early

Some consumers decide to close a bank account soon after opening for various reasons:

• You might discover a high-yield savings account offering significantly higher interest rates, or a checking account with lower monthly fees and better features.
• Moving to a new area where your current bank lacks branches, or finding an online bank with stronger digital banking tools and customer service.
• Major events like marriage often require opening joint accounts and closing individual ones, while divorce might necessitate separating previously shared accounts.
• Poor customer service or difficulties with account access can prompt customers to seek better banking experiences elsewhere.

How to avoid early account closure fees

You don’t have to let these fees limit your banking choices. Here are some strategies to avoid them:

1. Research fees before opening accounts: Always review a bank’s complete fee schedule before opening an account. Look specifically for early account closure fees in the terms and conditions or fee disclosure documents. Here are some common banking fees.
2. Choose banks without closure fees: Consider prioritizing banks that don’t charge early closure fees. This gives you the flexibility to switch if you find better options or your needs change.
3. Factor fees into your decision: When comparing banks, include potential early closure fees in your calculations. A bank offering slightly higher interest rates might actually cost more if you need to close early and pay a $50 fee.
4. Time your account changes strategically: If you’re already subject to an early closure fee period, mark your calendar and wait until the restriction period ends before switching banks.
5. Ask about fee waivers: Some banks waive early closure fees under specific circumstances, such as military deployment, moving outside the bank’s service area or other qualifying life events. It’s worth asking if you have a valid reason for closing early.

Bottom line

Early account closure fees are an avoidable cost if you plan ahead and choose your bank carefully. Before opening any account, review the fee structure and consider whether you might need flexibility in the coming months.

The smartest approach is often to choose banks that don’t charge these fees at all. With plenty of excellent checking and savings options available without early closure penalties, you can maintain the flexibility to switch banks when better opportunities arise.