account closure

Q&A: Can a brokerage close my account? You bet

July 8, 2024 By Liz Weston

Dear Liz: Is it common for a brokerage agreement to say the firm can close my account for any reason and without any notice? The agreement goes on to say that the brokerage can liquidate the investments in my account if it’s closed and that the brokerage is not responsible for any investment losses that result.

Answer: The short answer is yes — brokerage accounts can be closed at any time by the firm or by the client.

Such agreements often specify certain actions that can trigger a closure, such as failing to maintain a minimum required balance. But the agreements also typically have language that allows the brokerage to close your account at any time and for any reason.

Brokerages don’t commonly close customer accounts. If yours does, however, move quickly to transfer your investments to another firm.

Failure to act could result in your investments being liquidated, and you would owe capital gains taxes on any appreciation in their value.

Q&A: A $100 fee to close a brokerage account? Really?

June 3, 2024 By Liz Weston

Dear Liz: My brokerage recently sent an updated fee list. They now are charging $100 to close an account. That seems an incredibly high fee should I choose to move my investments somewhere else. The fine print says the fee will not apply to anyone who holds at least $5 million in qualifying assets. Well that certainly isn’t me. So they’re hitting those who have the least with a ridiculously high fee when it comes time to end the account. Is this typical across the investment industry?

Answer: Unfortunately, yes, but the usual fee is closer to $75.

Many brokerages have lowered their fees in recent years, with many eliminating commissions. But the account closure fee has stuck around, probably because most people don’t think about the costs of shutting down an account after they’ve opened one.

Ex-wife is still on his credit cards

February 11, 2013 By Liz Weston

Dear Liz: My boyfriend is deployed. I have his power of attorney, and during his deployment I have paid off all of his credit card debt. The accounts now need to be closed because they are ones that were acquired with his former wife. I know you say that it will hurt his credit to close accounts, but I’d rather close them because they’re tied to his ex.

Answer: If the former wife is a joint account holder on the cards, they should have been closed and the balances transferred to other credit cards in his name only before the divorce was final. The credit score dings from closing accounts and opening new ones pale compared with the potential damage a vengeful, or neglectful, former spouse could do with those cards. She could have run up big balances or tried to wrest control of the accounts and then failed to pay them, ruining his credit scores.

If your boyfriend has several other open credit cards, you could simply close these. If he doesn’t, you might talk to the credit card companies about closing these cards and simultaneously opening new ones in his name only. This might be tricky to do while he’s deployed, however, even with a power of attorney. Another option is to simply open a new card for him online before closing the others.