Can a bank close your account without warning? Here's what to do if it happens.

CBS News

a day ago

We rely on our bank accounts to pay bills and manage finances, but your bank can close it -- whether it's a checking, savings, or even credit card -- at any moment without warning.
It can be a financial headache, but there are steps you can take to try to resolve it or avoid it from happening again.
Bankrate's Greg McBride explains that banks have the right to close accounts based on their discretion and policies. There are various reasons it might happen, he said.
"It could be long periods of inactivity, having a zero balance in the account, or even a negative balance," McBride said. "If you've had excessive overdrafts, even suspicious or fraudulent activity, that could be cause for sudden account closure."
McBride says banks generally consider an account inactive if there has been little to no activity over several years. Negative balances from fees caused by frequent overdrafts can also trigger closure. Additionally if your bank suspects you're either a victim of fraud or engaging in fraud, it can close your account, he said.
If the closure is due to suspected fraud or unpaid balances, your bank may report it to something called ChexSystems, McBride said. It's like a credit report, and banks use it in their application process, so it could impact your ability to open an account somewhere else.
But also like a credit report, you are entitled to a free copy of your ChexSystems report annually, and you do have the right to dispute it.
When a bank closes your account, you will receive any remaining balances, according to Bankrate. You'll want to be sure you know how the bank will get you your funds. It's also important to know that any scheduled transactions or direct deposits will fail, which could result in late fees or missing income.
If a bank closes your account it's important to act quickly:
If you feel your account was wrongly closed, you can file a complaint with a federal agency like the Consumer Financial Protection Bureau or the Office of the Comptroller's Customers Assistance Group.
McBride said you can avoid account closure by being proactive and maintaining account activity, avoiding transactions banks might consider high-risk like online gambling, and staying in communication with your bank about any planned large deposits or other significant financial changes.