I have an old checking account, at a bank I no longer use (it's my only account there), with just a few cents in it. There are no account fees. Are there any reasons why I should or should not close the account?
Read your ToS.
Chase Bank will happily close your account:
Either you or we may close your account (other than a CD) at any time for any reason or no reason without prior notice.
Aside from it unexpectedly closing, if a bad actor get's a hold of your account information then they could use it to launder money and leave you with a hefty negative balance after the scam unravels.
You asked: "Does it hurt anything to have an unused checking account?"
My rebuttal: "What benefit does an unused checking account serve?"
I've had an issue with my bank where I was charged $30 for a fee because they didn't give me enough notice of the account being dormant.
You said you don't use it anymore, it is better to have it closed because aside from your cents being gone, they might ask you to pay for a dormant fee before they remove your name from their records, or worse, you might have a bad record just because of not paying the dormant fee.
Make sure to check with your bank to see if you'll be paying fees for your account and if so, what are the fees. In addition, some banks may not be interested in holding a small amount of money.
The credit unions I have known about have the requirement of a minimum $5.00 balance in a savings account to remain a member.
But the thing to watch for is the activity requirement. They want transactions each year. It can be checks, deposits in person, by direct deposit, or over the web interface. Once you go a year or two without any transactions they start charging an inactivity fee. Which can eventually drain your account. And then lead to closure.
Another thing to consider is that if you ignore it you may discover that the technology has changed, and you didn't establish an online login under the new system, and then years go by. When you want to use it again the phone number, and the address linked to the account is old. You forgot your security answers, and you have to visit in person to get back into the system.
Unless you know you will be going back to that location, and it would be impossible to reopen the account once it is closed, I would close it.
I know most banks have a minimum maintaining balance. I don't think there is any harm in having an unused checking account. The account will remain open as long as you continue to meet the bank's requirements, such as keeping a minimum balance.
You can choose to have it closed if you don't foresee using it in the future. I say keep it, especially if there are no account fees or minimum balance required. Who knows, you might be using it in the future.
Your bank might continue sending you correspondence about that dormant account (statements, checks, debit cards). It's more trash to take out and potentially a vulnerability (like someone might find your checks, use them and cause overdrafts).
Also, the bank might start paying interest on the remaining balance which needs to be reported to IRS. Not an issue if the balance is just a few cents though.
If you leave the account unused (where there is no activity at all) then the account is often marked dormant. What happens next varies from state-to-state, but eventually your account may be considered escheat and held by the state
Escheat is a government’s right to property if it is unclaimed for any reason after a period of time. Escheat rights can be granted by a court of law or given following a standard time period. In the case of death with no will or heirs, escheat rights may be granted to a state in a probate decision.
Escheat is more commonly known as "unclaimed property", and every state has a government agency to deal with it (here's California's office, for example). It usually happens when someone owes money to someone, but they can't legally transfer it to the rightful owner. With bank accounts, the escheat rules are meant to ensure that accounts that have been forgotten (i.e grandma had a bank account but got dementia and never told anyone) are handled properly. It usually means you have to go through a process to reclaim your property
The bank may be able to tell you what happened to the account or safe deposit box. It may still be at the bank, or maybe the owner closed it years ago. Or the bank may have determined that the account or safe deposit box was abandoned, so they transferred the contents to the state. This process is called escheatment, and every state has laws requiring financial institutions to turn over abandoned property after a certain amount of time, usually between three to five years. If the account was closed a long time ago, the bank may no longer have any record of it.
Granted, this is a small sum of money in your case, but even still, your account will eventually be marked dormant and may be held by your local state government until you (or your heirs) claim it.
I'm surprised no one has mentioned one of the big reasons to close an unused checking account that is their only account at a bank:
- Because it prohibits you from obtaining the "New Customer Bonus" if you want to ever open an account at that bank.
Many banks, especially when interest rates are high, offer attractive bonuses to lure in new customers. Those bonuses are often reserved to new customers. By keeping an old unused account around, you likely will not qualify for those bonuses.
If you close that account, you may qualify for such bonuses in the near future.