If you decide to close your personal bank account – either chequing or savings account – the bank teller will probably ask you why you want to close your account. There are several reasons why people choose to close a personal bank account, including the following:

  1. For lower fees: Most often, the reason people choose to leave their financial institution is that it costs them too much to keep their money there. Sometimes banks increase monthly fees, add fees where there were none before or reduce what’s included in a monthly package. If added fees for the monthly package outweigh the service you’re receiving, you know it’s time to switch accounts.
  2. For higher interest rates: Occasionally, banks lower interest rates on their savings accounts. By switching financial institutions for a better interest rate could benefit you in the long run.
  3. To stop an automatic transaction: Fraudsters can set up automatic 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 payments from coming out.
  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.

What to watch out for – A comparison of Canada’s top 5 banks

You would think that closing a bank account would be simple, and in some cases, it is. But some financial institutions have stricter guidelines, which can leave you with no other option than to go into your home branch. To find out how to close a personal bank account and what happens if you leave it inactive for too long, we compared Canada’s top 5 banks: RBC, CIBC, TD, BMO, and Scotiabank.

Canada’s Top Five Banks 

Royal Bank of Canada (RBC)

You may close your accounts:   

  • Online (some types of accounts do not qualify)
  • Over the phone (A $20 fee applies if this is the last account with the bank)
  • In-branch

Inactive: RBC will consider the account inactive after two years without a transaction. The bank will send the account holder a notice at the end of the first 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
2-8 years $20
9 years $40

Note about service fees: If the account remains inactive and the balance reaches $0 or less, after the two-year notice, the bank will close the account without further notice.

TD Canada Trust (TD)

You may close your accounts:

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

Dormant: An account is considered dormant after one year without activity.

Inactive: 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 Inactive Fee
2-9 years No Fee

Note about service fees: TD Bank will continue to charge service fees, even if the account is inactive. During this time, if the account’s funds go into overdraft, the debt will be sent to collections, if left unpaid.

Scotiabank

You may close your accounts:

  • In-branch only

You may close an account with Scotiabank in-branch only, and only at your home branch.

Dormant: Typically considered dormant after six months, depending on the type of account.

Inactive: 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 this, the unclaimed funds go to the Bank of Canada.

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

Note about service fees: The bank will continue to charge service fees to your account, and which can result in non-sufficient funds (NFS) charges of $48 per transaction. Once the bank realizes there’s a problem (i.e. you’re not using your account), they put together a report and decide what to do from there. Usually, they close your account, but it depends on the customer relationship with the bank.

To reactivate your Scotiabank account, you have to visit your branch in person. Reactivation can take 24-hours.

Bank of Montreal (BMO)

You may close your accounts:

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

Dormant: 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 $20
5 years $30
10 years (transfer to Bank of Canada) $40

Inactive: The bank will close all accounts that are inactive for at least one year and have a balance of $0.

Note about service fees: 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 fees apply.

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)

Dormant: 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

Inactive: After one year, 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.

Note about service fees: If during this time, the account goes into a negative status, monthly fees will still be charged. The bank will charge an overdraft fee at an interest rate of 21% for a negative balance. If the debt is not paid, it is then forwarded to collections.

Closing Your Account

Don’t just think that you can walk away from your bank account scot-free if you are no longer interested in using it. In some cases, you’ll still get charged the banking fees, which could put your account in overdraft and send you to the collection agency. If you are thinking about breaking up with your bank or opting for a different account, make sure you go through the appropriate steps to close your current account first.

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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