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CLOSING ACCOUNTS

One of the most frequently asked questions that we see in our Facebook Group (Bank Bonus and Travel Points), is “When can I close my account?”. The answer depends on a few factors, and this varies from person to person. Let’s take a look at some of the things to consider when making this decision.

 
A ONE-TIME BONUS
If a bonus promotion can only be completed once in a lifetime, then closing an account shortly after receiving the bonus will not affect a future bonus opportunity. Of course, this is assuming that T&Cs do not change in the near future regarding the lifetime language. In this case, there’s a few items to consider before closing.
 
  • A. Is there an EATF? If the T&Cs contain an Early Account Termination Fee, that needs to be considered before closing. Some can be high, and some can claw back the bonus if closed too early. Always check the EATFs.

 

  • B. Referrals. The second thing I would look at is the opportunity for referring friends and family in the future. If there’s an opportunity to refer others, and there’s no MSF, why close the account right away?

 

  • C. If there’s no EATF, no referral program, and the account has MSFs, then closing the account after completing a bonus promotion could be a reasonable option for some to avoid dealing with the monthly service fees.
A BONUS PROMOTION THAT CAN BE CHURNED

Most banks allow customers to complete a bonus promotion again in the future after a certain cool-off period. From what I’ve seen, most cool-off periods range from 12 months to 24 months. Since this bonus can be completed again, maintaining a good relationship with this institution should be considered for future bonus opportunities. Here are a few things to keep in mind;

 
  • In general, try to avoid closing an account immediately after receiving a promotional bonus. This action can potentially damage your relationship with some institutions and may prevent you from completing another promotional bonus in the future. This is not always the case because every institution is different, but definitely something to consider.

 

  • 6 months. The general consensus is to try to keep an account open for a minimum of 6 months. This will help maintain a healthy relationship with the institution for when it’s time for the next bonus offer. This will not always be possible and situations vary from person to person. Ultimately, this is a personal decision.

 

  • Look over the T&Cs to check for EATFs. Some bonuses can be clawed back if an account is closed within a certain amount of time from account opening date. It is very important to be aware of this, so you do not lose an entire bonus by closing too early.

 

  • MSFs. Monthly service fees can complicate things when keeping an account open after receiving a bonus. This is something that should also be considered. If the MSF is high, then keeping the account for 6 months might not be a good option for some. Take a look at the MSF waivers to see if they can be completed for a couple of months to avoid closing the account right away.

 

  • Referrals. Are there opportunities to refer friends and family? This type of account could be worth keeping longer, if you have the opportunity to make some extra cash via referrals. Also keep in mind the cool-off period, as some institutions start the eligibility clock when you close the account, instead of when the promotional bonus is received. In this case, try to complete referrals early to avoid delaying the cool-off period.
IN SUMMARY

The decision to close or keep an account open is a personal one that should be based on all the factors surrounding your current situation, along with all the T&Cs that are specific to each institution. The answer to the question “When should I close the account?” varies from person to person, and hopefully this guide allows you to make the best decision based on all the things that should be considered.