CommonCentsMom.com is advertiser-supported: we may earn compensation from the products and offers mentioned in this article. However, any expressed opinions are our own and aren't influenced by compensation. The contents of the CommonCentsMom.com website, such as text, graphics, images, and other material contained on this site (“Content”) are for informational purposes only. The Content is not intended to be a substitute for professional financial or legal advice. Always seek the advice of your Financial Advisor, CPA and Lawyer with any questions you may have regarding your situation. Never disregard professional advice or delay in seeking it because of something you have read on this website!
Many people have been left without their bank accounts and overdrafts when they've lost their jobs or have become sick. The banks have procedures in place to prevent this, but sometimes things can go wrong.
A bank account is oftentimes necessary to get through the day. Having your bank account closed unceremoniously can be extremely frustrating and is a situation that is unlikely to be pleasant. So why do banks close accounts without a notice, and how do you avoid it happening to you? This article will attempt to answer all those questions, and more. Let's find out.
When Can a Bank Close Your Account Without Notice?
A bank can close your account without notice if you have not made any payments for over a couple months. However, the bank must give you a minimum of 3 months' notice. If you are in arrears on any payments, and this has continued for a prolonged period of time, however, the bank can close your account without notice at any time. They can also often pull the rug on your account, so to speak, if they think that the account is used for illegal purposes.
Reasons Why Your Account Can Get Closed
There are a number of reasons why your account can get closed. The most common reasons are as follows:
Your account is dormant
A dormant account is one that has not been used for a prolonged period of time. Banks usually close dormant accounts without a notice, especially if the account has been inactive for over a year. A dormant account can also be closed if you have taken out a loan in your name, and have not made any payments on it for over 6 months.
They think there’s suspicious activity
Banks are well within their rights to close your account if they suspect you of doing something illegal. This can include the use of your account for money laundering, using your account to commit fraud, or any other illegal activity. They may suspect that someone has committed identity fraud on your account, for example. If this is the case, you will usually be contacted by the bank and asked to explain your situation, though not before having your account locked.
Too much overdraft
The bank can close your account if you have an overdraft. An overdraft is when you have taken out a loan, but are unable to repay it all at once. This can happen for a number of reasons, including if you don’t have enough money in your account to cover the loan.
What to Do to Avoid Getting Your Account Closed
The bank can close your account without notice if they decide that they want to do so. In order to prevent this from happening, you should make sure that your account is not dormant. You should also try to pay off any loans in your name that you can, as the bank may be reluctant to keep a loan in place if they think that you will be unable to repay it. It is also important that you do not use your account for illegal purposes, as this can lead to your account being closed without notice.