Category Archives: Banking

How to Close a Bank Account

How to Close a Bank AccountHave you ever wanted to close your bank account, but put it off because of the effort and time it would take? So you stick with your same bank even though you really want to move your money somewhere else. You don’t have to stick it out anymore.

Closing your bank account is a somewhat tedious process, but if you follow the steps in the right order, you can settle into your new account within a couple of weeks, maybe even less. Here’s what to do.

First, open a new account.

Closing your bank account before opening a new one is kind of like quitting your job before you have a new one lined up. Even if you get a new job right away, there will still be some inconvenience with the delay in paychecks.

Scope out your new banks by checking their websites and comparing prices and features for the type of account you want to open. Get referrals from friends and family. Consider opening an account with an online bank, which may pay higher interest rates, even on checking accounts.

Next, transfer the money to your new bank.

Withdraw your funds from your old account and deposit them into your new account. There are a few ways to make this happen:

  • Bank transfer.
  • Write a check for “cash” from your old account and deposit the check into your new account.
  • Go to a bank branch and withdraw the funds in the form of a cashier’s check then take it to your new bank.
  • Use your debit card to purchase a money order for the balance of your bank account then deposit the money order into your new account.
  • If the balance is relatively low, you can withdraw cash from an ATM and take the cash to your new bank.

Make sure you leave enough money in the old account to cover any pending transactions.

Change your direct deposits.

Once you have your new bank account and routing number, change your direct deposit so that it goes to your new account instead of the old one.

Check with your payroll department to see if there will be a waiting period before the direct deposit goes to the new account.

Consider everywhere you’ve stored your bank account information for deposits, Paypal for example, and be sure to switch to your new account.

Change any automatic payments.

After your account is closed, payment attempts may be declined and the biller may charge you an additional fee for the returned payment. Some banks also charge a fee for payment attempts on a closed account.

Review your bank statement to catch any payments you have automatically scheduled. Call those companies or visit their websites to change your autopay information to your new account.

It may be a good idea to keep a small amount of money in your old checking account for at least a month or two to cover any transactions you may have forgotten about. Then, when you’re sure there are no pending transactions, withdraw any cash that’s left and call your bank’s customer service to close your account for good. Destroy any remaining checks and shred your debit card to prevent fraud and avoid any future mix-ups with accounts.

I’m Finally Closing My Bank of America Checking Account

When I went off to college, I signed up for a checking account with the local Bank of America branch. Free checking with no account management fees, no minimum required balance, and tons of ATM around. It was perfect for a college kid who didn’t have much money and had no interest in paying someone money to hold cash for them.

The account has been really great and I’ve never had any major issues. In fact, they once messed up a cashier’s check and when trying to fix it, added free cashier’s checks to my account. I only used this feature one other time, when buying my first car, but that $10 saved was sweet! Basically, the account has been great to me, even though I don’t like Bank of America as a whole.

They wouldn’t allow me to add Lauren to this account for some reason, so we opened up a new account with them that is also fee-free, as long as we don’t go inside the bank. It hasn’t been a problem yet, but as soon as I deposit a check inside a branch, I’ll be slapped with an $8 charge that month. I’ve started to move my business elsewhere (specifically, to Capital One 360, formerly ING Direct), which has tons of great features and knows how to treat it’s customers.

Bank of America Is Going To Start Charging Me For Checking

Last week, I got a letter in the mail, effectively telling me that my free ride is over. Going forward, they are going to be charging me $12 per month. There are two ways for me to avoid the fee:

  • Have at least one qualifying direct deposit of $250 or more or
  • Maintain an average daily balance of $1,500 or more

I’m not interested in doing either of those because I am trying to move away from Bank of America to Capital One 360. I rarely use the account as is (it’s mostly used for convenience and in case of emergency) and I don’t want it to become my main account because it’s less convenient.

I’m Closing My Account

I’ve been taking advantage of Bank of America’s free services for years now. I won’t be able to take advantage anymore, and since I don’t want to jump through hoops, I’m going to be closing my account soon. In their letter, they said I would be given a 2 month grace period, but I plan on closing it well before I might hit the deadline.

Bank of America, it’s been a good run, but if you can’t match the online banks, more like me will be leaving.

Update: After seeing my article, Bank of America reached out to me, ultimately keeping the account free for another 12 months. That doesn’t change anything for me and I still plan on closing the account.

Prize Linked Savings Accounts Are Savings Accounts With A Lottery Twist

Most people know that playing the lottery is a losing proposition. Some call it a stupid tax, but the problem goes beyond the occasional dollar wasted. Prize linked savings accounts give rewards to people who save while keeping the excitement of the lottery.

Americans spend more than $60 billion a year on lottery tickets. And while the amount spent on lottery tickets is consistent across income levels, people with less income are spending a higher percentage of their income on lottery tickets. That’s beyond worrisome as poorer people are the people who can least afford to be throwing money away (which you are essentially doing in a lottery).

Prize Linked Savings Accounts

What Are Prize Linked Savings Accounts?

As an alternative to those who want the excitement of a lottery without all the risk, prize linked savings accounts (PLS) is a lottery where everyone wins. Another way of thinking about it is as a savings account where some people win a lot of money.

With a prize linked savings account, users get a slightly lower interest rate (than they would with a tradition savings account), and in return, they’re entered into a lottery that could make a lot (but not as much as a traditional lottery).

PLS accounts work because people are encouraged to save and at the end of the lottery, they still have account with more money in it than when they started. Studies have shown that people are more likely to save if there is a lottery or prize component associated with the savings account.

These accounts have been around for awhile in Europe and there are some pilot programs in 8 states, including Michigan, where 12,500 are entered to win 6 prizes of $10,000 each. Odds of winning? A little over 1 in 2,000. Much better than the lottery. Especially because even if you lose, you still win!

What Are The Issues With Prize Linked Savings Accounts?

While pilot programs in a few states have shown promising results, it’s not in everyone’s best interests. States currently earn 40% of lottery proceeds and would have to accept lower earnings. Still, their constituents would be better off for it, so it’s a trade-off that’s likely worth it. A bill has recently been introduced to Congress that would make it easier for federally insured financial institutions to operate prize linked savings accounts, but at the moment, it’s not that easy to find a program to participate in.

Who Should Use Prize Linked Savings Accounts?

PLS accounts are perfect for people who have a difficult time saving and who spend too much money on lotteries. I never play the lottery (I may have bought a ticket with a friend a few years ago), but there are people who spend money each week on lottery tickets, and at a cetain point it becomes an issue and the money would go much further in a savings account, even if it earned no interest.

With a PLS account, you’d keep your money AND you’d have an opportunity to win the lottery, albeit not the multi-million payouts you may be accustomed to seeing. But as the popularity of prize linked savings accounts grows, so will the payouts.

Who Should Not Use Prize Linked Savings Accounts?

If you already practice good savings habits, a PLS account is probably not for you. You’d lose out by accepting lower interest rates, when you could be earning more in a traditional savings account, or even better, by investing it. You don’t need the encouragement of a lottery to convince you to save.

Readers, what are your thoughts on prize linked savings accounts? Would you participate? Would it encourage you to save more?

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