How to tell it’s time to close your savings account and open a new one

Thinking about closing your savings account? Here are a few good reasons to close your current account and open a new one. (iStock)

Is your current savings account just not working for you? Maybe you’re not happy with the savings account rates, account terms or minimum balance requirements on your existing savings account. If so, it may be time to call it quits…and open a new (and better) savings account. 

You have options. You can stay put with your current bank or credit union, switch to another bank or shop for a savings account online. Not sure where to start shopping for a new savings account? Visit Credible to explore multiple high-yield savings options, all in one place.

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When you should close your savings account

The best time to close a savings account is different for everyone. Here are four ways to tell it's time to close a savings account and open a new one:

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How to open a new savings account online

It’s relatively fast and easy to open an online savings account. Take these steps to find a savings account that works best for you.

  • Research all your options. Many high-yield online savings accounts look at your credit score when determining savings rates. Some online banks require you to maintain minimum balances to avoid fees or offer a teaser rate that expires soon after making your first deposit.
  • Find out the minimum deposit requirements. If you’re switching savings accounts to earn higher interest or from a traditional bank to an online bank, you’ll want to inquire if the new account requires a minimum opening deposit. You may not have the money you need to open an account.
  • Look for fees or hidden charges. Before opening your new online savings account, find out if the online bank charges withdrawal fees or monthly maintenance fees. Monthly fees add up and can cancel out any money you’d save by earning higher interest.

Opening a high-yield online savings account is simple. Credible's online high-yield savings account marketplace lets you compare the interest rate and minimum balance requirement across multiple banks, all in one place. 

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Can I close a savings account without penalty?

Most banks charge no fees to close a savings account. However, you’ll want to make sure to cancel any automatic deposits or payments before closing the account. To close your current savings account for free, take these steps.

  • Any recurring transactions linked to your current savings account must be canceled. This might include any automatic deposits or withdrawals. To avoid insufficient fund or overdraft fees, make sure any recent transactions have also cleared before closing your account.
  • If you bank at a local branch, visit or call to speak with a personal banker who can help you close your savings account or switch to a high-interest savings account. You can also mail a letter to initiate the process, but this will take much longer.

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Does opening a new savings account affect your credit score?

If you’ve improved your credit score, switching banks won’t affect all your hard work. That’s because neither savings nor checking accounts are listed on credit reports, as they don’t involve borrowing money, like a personal loan or credit card. Since your credit isn’t impacted, switching accounts for a better savings account interest rate may be an excellent financial move. 

Want to know where you stand? Credible offers credit scores and credit monitoring services through Experian, so you can make an informed financial decision.

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Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

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