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Can you close a bank account with pending transactions?
Opening a bank account in Australia is often as easy as filling in an online form and hitting apply. However, closing a bank account can be a little more involved, particularly if you have pending transactions.
You can close a bank account with pending transactions but after the account is closed, any future transactions will be declined by the bank that administered your now-defunct account.
What is a pending transaction?
When you make a purchase from your bank account, an online check is conducted to verify the validity of the transaction and ensure you have sufficient funds to cover the payment. The bank then authorises the transaction, and the corresponding amount is deducted from your available funds. This deduction is reflected as a ”pending” transaction on your account.
In most cases, your bank withholds the amount owing for pending transactions (such as online purchases). Because the pending amount is deducted from your balance, you can close your account and the purchase will be honoured.
A pending transaction can only be cancelled or reversed at the request of the merchant. The best way to ensure that you don’t have any issues would be to wait to close your account after all pending transactions are complete.
If you have any scheduled transactions, such as direct debit payments, linked to your account, you might want to contact the creditor/s and supply them with alternate bank details to ensure a smooth transition to your new account.
If you’re unsure whether you have any scheduled transactions, speak to a banking representative to check.
How long will a transaction remain pending?
Generally, it takes two to five business days to process a transaction, although it can take up to 10 business days or longer. During this period, the transaction will appear in your bank account as “pending”.
When you have a pending transaction, the amount is deducted from your available funds, not your account balance. Pending transactions are handy because they allow you to see real-time updates for payments, withdrawals and refunds. It can help you keep track of your spending without surprises, like accidentally overdrawing your account.
Occasionally, a pending transaction may disappear from your transaction history, and the amount returned to your available balance. This occurs when transactions expires or are cancelled by the merchant without being processed.
While it may be reassuring to see the funds return to your account, it's still important to monitor your account activity. If you don’t recognise a particular transaction or did not authorise it, you can raise a dispute with your bank and/or the merchant. The bank can investigate your dispute when the pending transaction has been fully processed.
What else do I need to do before closing a bank account?
Before you close your account, the bank may check if your account is in a satisfactory condition. To be prepared:
- Ensure that your account is not overdrawn.
- Cancel or transfer all direct debits or credits, recurring payments and future-dated payments.
- Process any pending transactions, such as Visa Debit transactions, to settle uncleared funds.
- Present and clear any outstanding cheques.
- Unlink any overdraft facilities, term deposits, savings accounts, or mortgage offsets associated with the account.
- If the closure of the account requires multiple authorisations, ensure that all relevant individuals are present.
- Fulfil any other outstanding responsibilities mentioned in the account's terms and conditions before closing.
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Product database updated 21 Nov, 2024
