- Many reasons exist for closing a joint bank account, including divorce and the death of an account holder.
- Before closing a joint bank account, open a new one to transfer the balance.
- Transfer all automatic withdrawals and deposits to a new account when closing a joint bank account.
- Some banks allow one person to close a joint bank account, while others require all involved parties.
- Removing yourself from a joint bank account may be a viable alternative to closing it altogether.
Joint bank accounts allow two or more people to deposit and withdraw money to and from the same account. They are a popular choice among couples in a relationship, married or otherwise, as well as among parents of teenagers and the caregiving adult children of elderly parents.
However, there may come a time when you need to close a joint bank account. Closing a joint account can be straightforward as long as you know what to expect and how to prepare.
This guide will cover the ins and outs of how to close a joint bank account.
Reasons for Closing a Joint Bank Account
Many joint bank accounts are held by couples who are married or in an otherwise committed relationship. However, many marriages end in divorce. Data shows that 34% of women and 33% of men who had ever been married had also been divorced.[1]
When a romantic relationship ends, tackling financial tasks such as closing joint bank accounts is unpleasant but necessary. By closing a joint account, the former partners can avoid being financially responsible for one another. It can also provide some closure and benefit their mental health.
However, a breakup isn't the only reason why you may need to close a joint bank account.
In addition to divorce or the end of a romantic relationship, here are some other reasons why you may need to close a joint bank account:
- Partners stay in a relationship but wish to keep finances separate for any reason.
- One of the account holders passes away.
- A child becomes old enough for their own account and no longer needs to share a joint account with a parent.
- Former business partners who no longer operate a company together.
What to Do Before Closing a Joint Bank Account
Before you close a joint bank account, there are a few crucial steps to take.
Open a New Account
No matter why you're closing an old account, it is probably best to have another account waiting to receive your funds. You may need the other account in order to transfer your funds, receive direct deposits, and make recurring payments.
It's not necessary that your new bank account be held at the same institution as the joint account. In fact, it can pay to shop around for accounts that best suit your needs. For example, you may choose to open a checking account for everyday transactions and a high-yield savings account that earns interest on longer-term deposits. You may also be able to get better rates and terms than with your older accounts. By switching, you may also qualify for promotional rates or other offers for new account holders.
Transfer Recurring Payments and Deposits
Once you have opened a new bank account, you'll need to ensure that any recurring bill payments, transfers, or direct deposits are set up for the correct account. You may wish to review any past transactions over the previous few months and list payments and deposits that need to be updated. It's especially important to remember to change the information for your rent or mortgage, utility services, and credit card or loan payments. If you don't update the payment information, those accounts may be canceled, or you may have to pay penalty fees.
It can also prove helpful to download any bank statements or documents you may need for later tax returns or any other purpose.
Reviewing your inflows and outflows can also be a great opportunity to create a budget to help better manage your money in the future.
Determine Who Gets What
If you're closing a bank account at the end of a relationship—romantic, business, or otherwise—it's important to determine who gets what portion of the funds. In the case of divorces, some state laws may require courts to equally divide property between spouses.
Even if the couple isn't married, professional legal help may be necessary to determine which portion of the account funds each holder should receive.
In any case, the decision of who gets what should be made before anyone contacts the bank to close the account.
Ask The Bank for a Checklist
Before you officially close a joint account, it's worth contacting the bank to find out what the account closure process entails. Procedures and policies may vary by bank. For example, some banks allow only one account holder to close the account, while others require both to be present. Knowing ahead of time what's required with your bank can help the process run smoothly.
Make sure you understand any required documentation. Your bank will likely ask you to provide proof of identity. If you're closing an account because one of the holders passed away, you may also need to provide a death certificate.
Transfer Your Funds
Once all the details are ironed out, transfer the funds in the joint bank account to new accounts. Before officially closing the old account, it's important that it have a balance of zero or a positive balance, or else you may have to pay extra fees.
The Account Closing Process
Once all the steps above have been taken and no money remains in the joint account, it's time to close it.
As mentioned earlier, the account closure process may vary from bank to bank. Be sure to contact your financial institution to determine the necessary steps.
Typically, you may be required to visit or call the bank to close the account. However, some banks—especially those with no brick-and-mortar locations—may let you shut down the account online. Still, other banks may require you to submit a written statement of your intent to close the account.
When closing your joint bank account, requesting written confirmation of the closure can be helpful.
The Bottom Line
By knowing your bank's policies and being prepared ahead of time, closing a joint bank account need not be complicated or unpleasant. In fact, you may be able to use this as an opportunity to determine a new budget, find better interest rates, and achieve greater financial strength.
Closing a Joint Bank Account: FAQs
Can One Person Close a Joint Bank Account?
Your bank may allow just one person to close the account over the phone, in person, or online. However, some banks require both account holders to visit in person, either together or separately. Because policies vary by bank, contact yours to find out if you can close a joint account on your own.
No matter your bank's policies, you'll likely need to provide identification to close the account. This may include submitting a copy of a photo ID or supplying personal details such as your date of birth and/or Social Security number.
And if you're closing a joint bank account because the other holder passed away, you may be required to provide a copy of their death certificate.
Are There Fees for Closing a Joint Bank Account?
Some banks may charge a fee for shutting down a bank account, joint or otherwise. This may especially be the case if you close the account within a certain time period after opening it (for example, 90 days).
Can Closing a Joint Bank Account Hurt Your Credit?
Closing a joint bank account will not hurt your credit. However, if your account is not in good standing—for example, if it has a negative balance—this can show up as a mark against youin the report obtained by banks from consumer reporting agencies. Much like credit reporting bureaus, consumer reporting agencies like Early Warning Services create reports on consumers based on their banking activity. You may be refused a new bank account if you have an unfavorable report.
Can You Reopen a Closed Joint Bank Account?
Typically, you can't reopen a closed account. However, you can always open a new joint account at the same or a different bank. Before opening a new account together, shop around for the best account and bank for your needs—and make sure you won't need to close this new account quickly, as some banks may charge fees for closing new accounts within a specified time period.
Is There an Alternative to Closing a Joint Bank Account?
As an alternative, you may be able to keep the account open but remove yourself as an account holder.
Contact your bank to be sure of their policies for removing an account holder—while some banks allow this, others require the entire account to be closed. You may also need to supply the written permission of the other account holder to remove yourself.
It's also worth keeping in mind that the person removed from the account knows the related routing and account numbers, as well as any PINs, which could create a security concern.
