Does Closing an Account Hurt Credit? What to Know Before Switching Banks in 2025

Why Switch Banks? The Allure of the Best Bank Switch Offers

In 2025, banks are rolling out switch bank account offers to attract new customers, and the incentives are hotter than ever. From $150 to $300+ in cash bonuses to perks like high-yield savings accounts or fee-free checking, these deals can give your finances a serious boost. According to posts on X, some banks are offering up to £310 in cash and rewards for switching your current account using services like the Current Account Switching Service.

But before you jump in, you might be asking, “Does closing an account hurt my credit?” or “Why does closing an account hurt my credit?” These are valid concerns, and we’ll break them down to ensure you make an informed decision without risking your financial health.

Top 5 Best Bank Switch Offers for 2025

Here’s a roundup of the best bank switch offers to consider this year. These deals are designed to maximize your rewards while keeping your banking experience smooth:

1. Chase Bank: More than $180

Open a new checking account, set up direct deposits of at least $500, and keep your account open for 90 days to score $200. Plus, enjoy no monthly fees with qualifying activities. Perfect for those seeking a straightforward switch.

2. SoFi Checking and Savings: Up to $300 Bonus

SoFi offers a $300 bonus for new accounts with qualifying direct deposits. Their debit card is ideal for teens, with parental controls and no overdraft fees, making it a great choice for families.

3. HSBC Advance:  

Switch to HSBC using the Current Account Switching Service and get £175 plus ongoing cashback on debit card spending. Ideal for those who want both immediate rewards and long-term perks.

4. Citi Checking: 1% APY + Up to $200 Bonus

Citi’s checking account offers a competitive 1% APY and a $200 bonus for new customers who meet deposit requirements. A solid pick for those prioritizing interest earnings.

5. First Direct:

£150 BonusFirst Direct’s switching offer includes £150 for new customers who meet basic criteria, like setting up direct debits. Known for stellar customer service, it’s a great option for long-term banking.

Always read the fine print. Some banks charge early closure fees if you shut your account too soon after claiming a bonus, so plan to keep it open for the required period.

Does Closing an Account Hurt Your Credit? The Truth Revealed

One of the biggest questions when switching banks is, “Does closing an account hurt my credit?” The good news: Closing a bank account in good standing won’t directly impact your credit score. Bank accounts (checking or savings) don’t appear on your credit reports from major bureaus like Experian, Equifax, or TransUnion, so closures aren’t factored into your FICO or VantageScore.

However, there are scenarios where closing an account could indirectly hurt your credit:

- Negative Balances: If you close an account with an unpaid overdraft or fees, the bank may send the debt to collections. This can appear on your credit report and damage your score for up to seven years.

- Missed Payments: If your old account was linked to automatic payments for loans or credit cards, forgetting to update these could lead to missed payments, which can significantly lower your score.

- Credit Products Tied to the Account: Some banks require a checking account to maintain a credit card or loan. Closing the account might disrupt these, potentially affecting your credit.

Why does closing an account hurt credit in these cases?

It’s not the closure itself but the ripple effects—like unpaid debts or missed payments—that cause the damage. To avoid this, follow these steps:

- Open a New Account First: Set up your new account and transfer direct deposits and automatic payments before closing the old one.

- Clear All Balances: Ensure your old account has no pending transactions, overdrafts, or fees.

- Monitor for a Few Months: Keep an eye on your old account for stray charges and confirm all autopayments have switched.

- Request Written Confirmation: Ask your bank to confirm the account closure in writing to avoid future disputes.

Debit Cards for Teens: A Smart Banking Move

If you’re switching banks for your family, consider accounts offering debit cards for teens. These accounts teach financial responsibility while giving parents control. For example:

• SoFi Teen Debit Card: No fees, parental monitoring, and instant transfers make this a top pick.
• Experian Smart Money™ Debit Card: Links to Experian Boost® to help teens build credit with eligible bill payments, a unique feature for young users.

When switching to a teen-friendly account, ensure the bank offers robust mobile apps and spending limits to keep things manageable. These accounts can also qualify for switch bank account offers, doubling the benefits for your family.

How to Switch Banks Without the Stress

Ready to grab one of the best bank switch offers? Here’s a foolproof guide to make the transition smooth:

- Research Offers: Compare bonuses, fees, and perks to find the best fit. Sites like Be Clever With Your Cash provide updated lists of switching deals.

- Open Your New Account: Use the Current Account Switching Service (available with many UK banks) for a seamless transfer within seven days.

- Transfer Funds and Payments: Move your money, direct deposits, and autopayments to the new account.

- Close the Old Account: Once everything’s settled, request closure and confirm it’s complete.

- Enjoy Your Bonus: Watch that cash hit your account and celebrate your smart financial move!

Why Are Banks Offering Free Money?

You might wonder: Why would a bank just give me $300 for switching?

Simple answer: Customer lifetime value. If they can win you over with a one-time bonus, you might stick around for years — getting loans, using credit cards, and investing through them.

But it’s not all free money. You have to meet the fine print:

• Direct deposit usually required
• Must keep the account open for 90+ days
• Sometimes you must use your debit card a few times or have a certain number of transactions

Final Thoughts:

Switching banks in 2025 is a golden opportunity to boost your finances with the best bank switch offers. Whether you’re chasing a $200 cash bonus, setting up a debit card for teens, or simply streamlining your accounts, you can do it without hurting your credit score. By addressing concerns like “why does closing accounts hurt credit” and following our expert tips, you’ll navigate the process like a pro.

Ready to make the switch? Explore the offers above, open your new account today, and unlock the rewards waiting for you. Have questions or want to share your bank-switching success story? Drop a comment below—we’d love to hear from you!

You can visit the BYDFi platform to learn more about investments and successful ways to live a successful life.

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