You might assume you “own” your bank account — after all, it holds your hard-earned money. But in reality, you have a relationship with the bank, and that relationship can be ended — sometimes without warning.
CBS News Philadelphia reported that U.S. banks can close checking, savings, or credit card accounts without prior notice.
According to the Consumer Financial Protection Bureau (CFPB), financial institutions have the legal right to do so, and the reasons might not always be obvious.
If you’re concerned about the possibility of losing access to your accounts, here’s what you should know.
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Why your bank might pull the plug
Banks and financial institutions can close accounts for a range of reasons — some routine, others more serious.
Prolonged inactivity is a common trigger; however, the CFPB points out that this typically applies to accounts dormant for several years. For example, Wells Fargo may close an account after 16 months of inactivity, while JP Morgan Chase may do so after 18 months.
But inactivity isn’t the only reason. The CFPB notes that accounts may be closed due to excessive overdraft fees or if the balance is too low to cover ongoing fees.
The most serious reason is suspected fraud or suspicious activity. If your account is closed for this reason, it can have a wider impact — potentially affecting your ability to open accounts elsewhere.
To help protect consumers, some states require banks to provide notice before closing accounts. In New York, for instance, Senate Bill S9757 proposes requiring banks to notify customers of closures and return any remaining funds.
If you receive a closure notice — or your account is shut down unexpectedly — it’s important to act quickly to resolve the issue and safeguard your financial standing.
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Act fast to protect yourself
If you lose access to your bank account, contact your bank immediately to understand why it was closed and how any remaining balances will be returned. If you owe money, ask how to settle the outstanding amount.
Don’t forget to stop automatic transactions linked to the account to prevent issues.
Ask whether the closure was related to fraud or suspicious activity. Financial institutions may report such cases to ChexSystems, a consumer reporting agency, which can affect your ability to open accounts elsewhere.
Like a credit report, you’re entitled to one free ChexSystem report every 12 months, according to the CFPB. If your account was closed, it’s a good idea to request your report and dispute any errors.
Many large banks also use Early Warning Services (EWS) to track account activity. You can request and dispute your EWS report as well.
If you believe your account was wrongfully closed, you can file a complaint with the Office of the Comptroller’s Customer Assistance Group. The bottom line: having your bank account suddenly shut down can be disruptive, but there are steps you can take to understand and resolve the issue.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.