Before closing a bank account, it is important to pay attention to hidden charges such as minimum balance penalties, debit card fees, and auto-debit deductions. By following the right checklist, customers can avoid unwanted penalties and financial troubles.

Updated: Dec 07, 2025 | 9:42 PM
By: Shradha Tulsyan

Closing a bank account may look easy, but in reality it is not. Without proper preparation, you may face unexpected deductions due to minimum balance penalties, debit card charges, and auto-debit instructions.

Process and Risks of Closing a Bank Account

Many people assume closing a bank account is simple—fill a form, transfer the balance, and the account gets closed. But in reality, multiple hidden charges may be involved.
If the minimum balance requirement is not fulfilled or the account has a negative balance, the bank may apply penalties at the time of closure.

Impact of Debit Card and Auto-Debit

If the debit card linked to the account is still active, annual charges or pending fees may be deducted during closure.
Similarly, if any loan EMI, mutual fund SIP, or insurance premium is set on auto-debit, it must be cancelled before closing the account. Otherwise, failure of payment could lead to penalties and could negatively affect your credit score.

ITR and Bank Details

Another important aspect is Income Tax Return (ITR).
If an incorrect bank account number or IFSC code is mentioned in the ITR form, your tax refund will not be processed. Therefore, updating bank details before closing the account is essential.

Checklist for Customers

1. Check the outstanding amount and minimum balance status.

2. Clear all debit card–related charges or fees.

3. Stop all auto-debit instructions (SIP, EMI, insurance premium).

4. Update bank details in ITR and other financial documents.

5. Take written confirmation from the bank that the account is closed.

Closing a bank account is not just about filling a form. Without careful planning, unwanted charges and financial issues can arise.
Customers are advised to follow the complete checklist and clear all dues before closure. This not only helps save money but also prevents any future legal or financial complications.