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Closing Your Personal Bank Account: What to Watch For

April 21, 2021
6 mins
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If you decide to close your bank account, the bank teller will probably ask you why in an effort to correct any grievances and keep you as a customer. If you choose to disclose your reasoning, your answer may include:

  1. Lower fees. People often choose to leave their financial institution because it costs them too much to keep their money there. Sometimes banks increase monthly costs, add fees, or reduce services in a monthly package.
  2. Interest rates. Occasionally, banks lower interest rates on their savings accounts. You could earn more by switching financial institutions for a higher interest rate.
  3. To stop an automatic transaction. Fraudsters can set up automated transactions to take money directly out of an account. Sometimes, these illegal debits are difficult to trace, and the only option is to close the account to stop the unauthorized payments.
  4. Divorce is on the horizon. If you know that you and your partner are going to part ways, you may wish to consider closing your joint account.
  5. You’re moving. If you’re moving and there’s no branch nearby, you’ll want to switch banks — especially if your bank doesn’t allow certain transactions to be performed online or over the phone.

A comparison of Canada’s five big banks

You may think that closing a bank account is simple. However, some financial institutions have stricter guidelines, leaving customers with only one choice: to visit their home branch in-person.

We compared Canada’s top five banks to find out how to close a personal bank account and what happens if you leave it inactive for too long.

Canada’s five big banks:

Bank of Montreal (BMO)

You may close your accounts:

  • In-branch
  • Over the phone (only if you have a $0-balance)

If you choose to close your account within 90 days of opening it, the bank will charge a $20 fee.

Dormant or inactive accounts

BMO considers accounts with no activity for two years to be dormant. The bank will send the account holder a notice after two and five years of inactivity and charge the account a dormant account fee. After 10 years, BMO sends the unclaimed funds to the Bank of Canada.

Years dormant Fee
2 years $30
5 years $30
10 years $40

The bank will close accounts inactive for at least one year with a $0 balance.

If there are insufficient funds in the account to cover the service fees, the bank considers this authorization to close the account without the need for a final notice.

If the account holder acknowledges the dormant account notice within 60 days, no dormant account fee applies, and the account remains open.

Canadian Imperial Bank of Commerce (CIBC)

You may close your accounts:

  • In-branch
  • Over the phone (as long as it isn’t the only account you have at the bank; otherwise, you must go into the branch)

Closing your account within 90 days of opening it may result in a $20 fee.

Dormant and inactive accounts

All CIBC personal deposit accounts are considered dormant after two years without a transaction. The bank will charge a set fee or the account balance, whichever is less, until the 10th year, when the remaining balance is sent to the Bank of Canada.

Years dormant Fee
2-4 years $20
5-8 years $30
9 years $40

After 24 months, the bank will send a written notice by mail to your last known address. After 10 years, the remaining funds go to the Bank of Canada.

Royal Bank of Canada (RBC)

You may close your accounts:

  • Online (some types of accounts do not qualify)
  • Over the phone
  • In-branch

Closing an account within 15 days of its opening is free. After this window, a $20 fee applies unless the account is closed in person.

Dormant and inactive accounts

RBC will consider the account inactive after 12 months without a transaction. The bank will send the account holder a notice at the end of the first two years, then again at five and nine years of inactivity.

After the 10th year of inactivity, the bank sends the unclaimed funds to the Bank of Canada.

Years Inactive Fee
2-5 years $20
9 years $40

If the account holder acknowledges the dormant account notice within 30 days, the fee is waived.

If the account stays inactive and the balance reaches $0, the bank will close the account without further notice.

Scotiabank

You may close your accounts:

  • In-branch only

You can close a Scotiabank account at your home branch.

Dormant and inactive accounts

Depending on the type of account, it may be considered dormant after six or 12 months.

After two years, Scotiabank will send the account holder a written notice by mail to their last known address. Notices are sent every two years until the 9th year when the bank sends a final notice. After, the unclaimed funds go to the Bank of Canada.

Years inactive Fee
2-4 years $20
5-8 years $30
9 years $40

Inactive accounts with a balance of $15 or less are automatically closed after 12 months of inactivity.

To reactivate your Scotiabank account, you must visit your home branch in person and bring a valid ID to prove your identity.

Toronto-Dominion Bank (TD)

You may close your accounts:

  • In-branch
  • Over the phone through EasyLine
  • Secure messaging online through EasyWeb

Dormant and inactive accounts

An account is considered dormant after one year without activity.

TD Bank will send the account holder a written notice by mail after two years of inactivity. After year 10, the bank will send the unclaimed funds to the Bank of Canada.

Years Dormant Fee
2-9 years No fee

Customers can reactive their accounts by calling the bank or visiting a branch.

Closing your account

Banks will typically continue to charge account fees until the balance is sent to the Bank of Canada or the account reaches $0. In some cases, accounts can go into a negative status. The customer may then see additional fees, including non-sufficient funds (NSF) charges or overdraft fees — sometimes at a substantial interest rate. If the debt is not paid, it can be sent to collections. However, banks may choose to close the account without further notice.

Unclaimed balances (inactive for 10 years) are sent to the Bank of Canada in December of each year. Balances less than $1,000 are held for 30 years. Accounts with balances of $1,000 or more are kept for 100 years before they are sent to the Receiver General for Canada. People can search the Bank of Canada Unclaimed Balance Registry to find their accounts and submit a claim to retrieve the funds.

RATESDOTCA Team

The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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