Banks may close your account for a variety of reasons. These causes can include a history of rejected checks, an unpaid negative amount, a connection to high-risk companies, or inactivity. Surprisingly, several of these institutions can cancel your accounts without prior notice.
As a result, you may discover that your account has been blocked while attempting to pay for items you’ve purchased or a hotel reservation. Of course, such an occurrence can be aggravating. Inactive bank accounts (those that haven’t been used to execute a transition in a long time) will be designated as dormant by banks, and they will be closed because they are costly to maintain.
Dormancy differs from account closure in that a dormant account is still active but cannot be used. New transactions, internet banking, check requests, and other activities are not permitted on such accounts. Your bank will transfer the money in your account to the state government after a long period, and it will be labeled “unclaimed property.”
This can happen if you haven’t used the account for three to five years without making a transaction. If your bank transfers money from your inactive account to the state, you can obtain it back by filing a claim with your state treasury or unclaimed property agency.
It’s simple to reopen accounts that have been closed due to inactivity. All you have to do is complete a transaction (deposit or withdrawal) within a certain time frame. However, you should check with your bank to confirm that your transaction is sufficient.
Before reclassifying an inactive account as dormant, banks may contact you. You’ll get a notification with information on how long you have to reactivate your account. You will overdraw your account if you make transactions or payments that exceed the amount of money in it.
This means you’ll end up with a negative balance. If your account is inactive for 30 days, three months, or more, your bank will close it (depending on the bank). Consult your bank’s deposit account agreement to learn more about how long you can have a negative balance.
The bank’s policy determines whether you can reopen an account closed due to overdrafts. Assume your account was shut down because your balance had been negative for a long period. You can reopen it in that scenario by paying the negative balance, which normally includes your transactions and overdraft fees for things that bounced.
Are you interested in learning about savings accounts? Read our blog on savings accounts with the best interest rates.