While loads of people rush to open bank accounts each day, some rush to their banks to close their accounts. People close their accounts for several reasons. For you, it could be because you became fed up with the banking system and decided to manage your finances yourself. For others, it may be because of bad customer service or high interest rates. After closing your account, your bank withdraws everything in the account and offer it to you. But, since banks operate with rules and regulations from above, do you think a bank can keep your money after closing your account?
When you close your account, your banks have to return your money, regardless of why you closed the account. But, if you have any outstanding fees or charges, the bank can deduct those from your balance before turning them over to you.
Normally, you expect the process of closing your account to be smooth and easy. However, you are stunned to find out that it isn’t as easy as it seems. You still have to fill out some documents, stop auto-pay and do other things to facilitate the closure. In fact, you might have even heard that when you decide to close your account, your bank may end up keeping your money. Is that true? Can a bank retain your money when you deactivate your account? The answer isn’t really straightforward, so you’ll have to read on to understand.
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Can a Bank Keep Your Money When You Close Your Account?
At last! After much procrastination, you have financially decided to cut ties with your bank after trying so hard to cope with their exorbitant charges and terrible customer service. Motivated by the thought of finally ending the relationship with your bank, you decide to look up the process of closing an account. But while rummaging the net looking for the right article to read, a weird thought crosses your mind.
What if you close your account and the bank decides to keep your money? Is such a thing even possible? There is only one way to find out. But before we do, let’s look at a few reasons why people close their bank account.
Why Do People Close Their Bank Account?
- Bad customer service:
There is nothing as frustrating as dealing with terrible customer service, especially in an establishment entrusted with your hard-earned money. Sometimes, individuals don’t cut ties with their bank due to awful customer service but because the service rendered isn’t great or very personable.
Banks today have developed into giant corporations where a customer can enter a bank and never meet with a similar person twice. This can lead to a level of disconnect between employees and their customers, promoting negative and impersonal relationships between you and your bank.
By considering a new bank or using alternative financial services, you can find the personal, cozy customer service you need and yearn for.
- Becoming unbanked:
A new type of financing has been introduced, and it is called being unbanked. For several people, banks are the headquarters of their financial needs, but for a rising number of Americans, banks have become unnecessary and expensive.
Managing their finances completely outside the banking system has become a less stressful and safer way to handle their money. Being unbanked also helps this category of individuals avoid dealing with the cost they would have experienced in the banking system.
- Availability:
If you are relocating, there might be one thing on your lengthy to-do list, changing banks. It is impossible to find all bank branches in an area, so if you are relocating, there is a possibility that your bank isn’t going to be in your new area and doing all of your banking online or through the mail isn’t advisable in some situations.
The opening hours of most banks can be very inappropriate for some individuals. Banks always close at 5 pm, meaning that if you need to cash a check on a weekday, but you work typical business hours, doing so wouldn’t be possible.
But, alternative financial services offer prolonged business hours during the weekday, so you don’t encounter a problem. A different bank may also have suitable hours than your current bank does.
- Requirements and fees:
Another reason why you might close your bank account is because the minimum requirements or fees aren’t something you can afford or keep up with. If you cannot manage the minimum required amounts for your bank account or the constant fees to keep and maintain it, then it may be time to close that bank account and bid the bank farewell.
Bank account fees can be pretty expensive and uncertain. Some banks charge fees to perform a few transactions a day, open an account, for overdrafts, and even fees to keep your account opened at their bank. Several people are fed up with spending extra cash because of their bank account fees, and others aren’t ready to experience surprises that come in extra expenses.
- Switching banks:
Sometimes, you may want to leave a bank or credit union for the sake of a new one. If that is the case, it makes sense to go bank shopping, so you end up selecting the bank that meets your requirements and lifestyle.
Having understood why people close their accounts, let’s consider the possibility of a bank holding on to your money after closing your account.
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Banks Holding Your Money After Closing Your Account: Possible or Not?
It is common practice for a bank to return “all” your funds after finalizing the process of closing your account. Your bank will not and cannot hold your money for any reason unless you owe the bank some money or have yet to pay some outstanding fees or charges. In that case, the bank will deduct the fees, charges, or owed amount from your balance and hand over the rest to you.
How Long Can a Bank Hold Funds on a Closed Account?
When you close your account, you expect it to stop receiving debit or credit or performing any transaction. In addition, upon closing your account, you expect your bank to hand over all your funds. But what if they decide to hold on to the fund? How long will it take before they release it?
A bank cannot hold on to your money after closing your account. Your bank can only deduct a certain amount from your balance (if you owe them) and give you the rest.
Ensure you carefully scrutinize your bank’s policy before closing your account, so you understand their rules and regulations.
