4 Reasons Your Bank Can Close Your Account
- - 4 Reasons Your Bank Can Close Your Account
Dana George, The Motley FoolJanuary 2, 2026 at 7:50 AM
0
Key Points -
After several years of non-use, a bank account may be considered inactive and turned over to your state’s unclaimed property program.
Banks must be careful to follow federal rules and ensure customers do the same.
Violating bank policies is one of the fastest ways to have an account closed.
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If you have a bank or credit union account, there's no guarantee that it will always be available to you -- particularly if you fail to follow bank policies. In fact, banks have a responsibility to monitor accounts to ensure that they (the bank) can't be accused of being complicit in criminal activity.
There are four distinct reasons a bank may close your account.
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1. Your account is inactive
When there have been no debit or check transactions on your account for several years, the bank may consider the account abandoned. When that happens, the bank will close your account and turn it over to your state's unclaimed property program.
If your goal is to prevent closure due to inactivity, consider making occasional transactions, such as paying a bill or making a purchase. Typically, a bank will contact you before closing your account; however, it's possible that you may not be notified until you attempt to use your checking account or debit card.
2. You violated bank policy
Banks are subject to government oversight, meaning they must follow federal regulations and ensure that their customers do the same. Some rules are clearly significant, like not using your account to purchase illegal drugs. Others don't seem as important. For example, some banks won't allow you to use a personal account for business dealings, and vice versa. Still, either can lead to involuntary account closure.
If you're unsure whether your planned account use aligns with bank policy, it's a good idea to review your account rules.
3. Too many bounced checks or overdrafts
If you frequently overdraw your account or have insufficient funds, your bank may become concerned about your ability to maintain a positive account balance and may close it.
Not only can a good household budget help keep you on track, but it can also help you avoid costly overdraft fees.
4. Your account has been flagged for suspicious activity
The last thing a bank or credit union wants to be accused of is being complicit in illegal activity. Banks are legally required to monitor all accounts for suspicious transactions or activities. What they're looking for is any behavior that might indicate fraud, money laundering, or some other illicit activity.
Here's a sample of the behavior that can trigger an audit:
An unusual pattern of cash deposits (including large or frequent deposits)
Large cash withdrawals
Inability to verify your identity
Numerous international wire payments
Any other indication that you may be associated with an illegal business.
Let's say your bank closes your account due to suspicious activity. That doesn't mean the account will necessarily remain closed. Your job is to provide evidence that each of your transactions was on the up-and-up.
Steps to take to avoid account closure
The easiest way to handle involuntary account closure is to prevent it. The following tips can help:
Sign up for alerts: The closer you monitor your account, the lower the odds that you'll end up with a negative balance. If your bank offers a program that sends you a notification when your account falls below a certain amount, sign up for it. Better to know in advance when your account is getting low.
Link to another account: Link your checking account to another one of your accounts to ensure funds are transferred into your account if your balance gets too low.
Give your bank a heads-up: Let your bank know in advance if you're making unusual or significant financial moves. For example, if you sold a car for $12,000 and were paid in cash, call your bank and notify them before making a $12,000 cash deposit.
Don't share your account: Never let anyone who isn't authorized to use it access it. Let's say a cousin asks you to hold money for them in your account. Find a polite way of saying no.
By avoiding any of the red flags that might cause your bank to take a closer look at your account, you can also avoid the hassle of an unwanted account closure.
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