Banks can freeze your account for several reasons. These reasons range from inactivity, suspicious transaction, security reasons, and unpaid debt. When your account is frozen, you’ll be stopped from making certain transactions on your account till the issue is rectified. If your account were frozen, you’d want to know why. If you figure out why, and you discover that the issue isn’t something that can be resolved pronto, you may want to open a new account. But is this possible? Can you open a new account if a bank freezes your exiting account?
If your account was frozen by a bank for a severe reason, opening a new one will be impossible. In fact, it is not advised to open a new bank account if your existing account was frozen. The best move here is to contact your bank and figure out why your account was frozen and the way forward.
We use our bank account to initiate several transactions. Some of us use it for our businesses. Some use it to send money to loved ones, make purchases at the mall or grocery store, etc. Thus, if your bank freezes your account, you won’t be able to carry out certain transactions with your account. Such a situation can be quite frustrating. In fact, it can be more frustrating if your bank is taking time to unfreeze the account. In that case, you may want to explore other options like opening a new bank account. However, is that possible? There is only one way to find out!
Can You Open a New Bank Account if Your Account Is Frozen?
Banks don’t act independently. The federal government usually regulates them. To ensure that customers’ money is safe and there are no threats to a country, banks often keep a keen eye on individual accounts. When they notice strange transactions, they place a temporary block on the account. This prevents the suspected act from taking place, which could be money laundering, terrorism financing, account hacking etc. In addition, the freeze is to get the attention of the account owner.
For instance, if you have $50,000 in your account and your bank discovered that you are trying to withdraw the entire money in your account, such an action could raise a red flag, especially if you aren’t fond of withdrawing such a huge amount of money.
So what would the bank do? To ensure that you are the one withdrawing the money and not a thief, your bank will proceed to block your account and probably contact you.
The bank will contact you to verify if you are the one trying to make the withdrawal. If you are the one, the account will be unfrozen. If you aren’t the one, it’ll remain that way until the bank figures out who is trying to siphon your money and how they got access to your details.
What Is a Frozen Account?
A frozen account is one through which no transaction can be initiated. If your account is frozen, you won’t be able to transfer money to an individual, may payment, or even withdraw money. But, you will be able to receive money if a bank freezes your account.
Account freezes are usually the result of a court order, and, in a few cases, they may be initiated by the bank. This often occurs when the account holder has unpaid debts to the creditor or the government or when the bank observes suspicious activity on the account.
How Do You Unfreeze an Account?
If a bank freezes your account, you shouldn’t be scared, especially if you are sure that you haven’t done anything wrong. These freezes aren’t permanent and generally require certain actions from you before they can be lifted.
The account freeze can be lifted if, and when, payment is made in full to clear an unpaid debt to a creditor or the government. In some situations, the creditor may be able to settle the debt for a reduced amount.
Regarding s suspicious activity, the bank generally unfreezes an account after an investigation is over. If illegal activity is discovered, or if the account holder is embroiled in any fraud via the account, the account may be permanently closed, and the funds in the account may be sized.
Account Is Frozen: What Next?
When a bank freezes your account, and it’s taking them a long time to conclude their investigation, you may be tempted to open a new account. However, before doing that, you need to ask yourself one important question? Is opening a new account possible?
Opening a new bank account after a bank freezes your account is possible. But, it depends on several factors. First off, it depends on the country you are in. Secondly, it depends on why the account was frozen in the first place.
For instance, if your bank account was frozen due to an unpaid debt, it may be possible to open a new bank account. However, suppose your bank account was frozen due to a major issue like fraud, money laundering or terrorism financing. In that case, a tag may be placed on your SSN or other important details, making it impossible for you to open a new bank account.
What Are Your Rights if Your Account Is Frozen?
The act of freezing customers’ accounts is very common, especially when financial crimes like money laundering, identity theft, terrorism financing are on the increase. Remember, your account can be frozen even if you are innocent. It is one of those security measures banks adopt to checkmate crimes. However, if your bank account is frozen, you may want to know your rights as a law-abiding citizen.
A bank cannot freeze your account without telling you why. Thus, if your account gets frozen, it is your right to find out why. After discovering the freeze, don’t hesitate to contact your bank. When you call them, ensure you are open and cooperative.
If you weren’t involved in a serious issue, the chances are that the freeze on your account will not last long. However, if you were involved in a severe crime, you may have to kiss the account goodbye.