A closed bank account can, in a nutshell, be reopened. However, a lot will depend on the policies of the bank as well as the reason why the account was first closed. For a variety of reasons, including dormancy and possibly fraudulent activities, a bank may close an account. You can verify whether or not the account can be restored by understanding the reason the bank closed it.Banks maintain the right to close your account, so keep that in mind. Although they are not compelled to, your bank may let you know about the shutdown. All banks must, however, refund you for any funds you have in the account minus any unpaid bank charges. The money that is refunded frequently takes the form of a check. If your bank ever determines that you are a holder of a high-risk account, your account will be closed. Let us see can you reopen your closed bank account or not.
Reasons to close Account
There are some typical reasons a bank can choose to close your account:
Fraudulent action, either proven or suspected .If there are obvious indications of fraudulent activity, your bank may shut your savings or checking account. If the bank has reason to believe that an account is linked to fraudulent behaviour, it may also block (or even close) the account.A negative balance due to unpaid.
A frequent reason for outstanding negative bank balances is excessive overdrafts. Banks have different policies about how long you can keep a negative balance, but most will cancel the account after 30 days to 3 months. Banking with a company that charges high overdraft fees carries significant risk because the costs themselves can result in a negative balance and the possibility of your account being closed.
How to proceed if your bank account has been closed?
You might not understand that your account has been closed until your checks start to bounce, your debit card stops working, and you lose access to your account online because banks are not required to notify you of impending account termination.
In any case, your initial move should be to identify the cause your account was closed. You can find out that by dialing the number directly to the bank. Unpaid bank commitments, a history of unpaid overdrafts, an inactive account, and fraudulent activity are a few possible reasons.
To find out which banks reported your account and why to examine your ChexSystems report next. ChexSystems is a firm that gathers and keeps track of the details on your bank accounts. Your ChexSystems keeps records of missed payments, returned checks, unpaid debts, and insufficient funds for up to five years. If the bank terminates your account and you’re not sure why you can pull your ChexSystems report to see if it has the details you need.
Steps for opening a bank account that has been closed
A closed account that could be the result of fraud or financial risk (such as a significant negative balance) will often be more difficult to reactivate. On the other hand, reopening an inactive account or one with a negative balance won’t be as difficult.
Depending on why a bank account was closed, several measures may need to be taken to reopen it. Nevertheless, as soon as you learn that the account is closed, you should get going as the banks can charge off the loan within 60 days as required by the law.
Reactivate a bank account that was closed for inactivity
By performing a digital direct deposit within a certain timeframe, you can often reactivate a dormant account. Some banks will demand that you submit a request before they will reopen the account. A direct deposit must be submitted with that request. Other banks will reopen the account when you make a withdrawal rather than a deposit.
As a result, reactivating a dormant account usually only requires one transaction. Check the terms and conditions of your bank before opening a dormant account, though, as there can be a minimum deposit requirement.
Reactivate a bank account that had been closed off for fraud
If your bank observes questionable or fraudulent activity on your account, it will report it to the Department of Treasury in a Suspicious Activity Report. Once that’s done, you’ll be unable to reopen the account. You cannot open a new account with other banks.
The best part is that before the bank flags your account for fraud, it will let you know. By demonstrating that all deposits are authentic and that no transactions are connected to fraud, you might be able to prevent the closure completely. However, if the bank determines that you are a high-risk account holder, they still maintain the right to close your account.
Reactivate a bank cancel account due to an outstanding negative balance
The bank’s policy entirely governs your eligibility to reactivate a bank account that has been closed due to a sustained negative balance. Nevertheless, the bank often agrees to let you reopen the account in exchange for payment of the negative balance, all overdraft fees, and the transaction costs associated with each item that bounced.
If the bank closed your account due to a history of repeated overdrafts and a negative balance, you probably wouldn’t be able to reinstate it. But you’ll still be obligated to cover the remaining balance and all related charges. Otherwise, the bank can notify a credit bureau and your Chexsystems about your account. Your credit score will suffer as a result, and it will be difficult for you to acquire a bank account with other institutions in the future.
If an account was closed by either you or the bank, the reason(s) for the closure and the bank’s policies determine whether you can reopen the account. Get in touch with your financial institution. Look at possible options to keep your account open and get it back in good standing.