People close their bank accounts for several reasons. The reasons include unsatisfactory customer service, distance from house to the bank, high-interest rates, stringent requirements, fees, etc. If you choose to close your account for one of the reasons mentioned, or any reason at all, you wouldn’t be queried. You are free to shut your account anytime you like. So, imagine you close your account, and you get your payroll check via a direct deposit. What would happen to the funds?
If your bank account is closed and you receive a direct deposit, your bank will reject the funds. Besides, the bank will inform the sender (your employer) of the situation and return the funds.
You closed your bank account with a certain bank due to their unsatisfactory customer service. However, you forgot to inform your employer of the change. On payday, you realized that you forgot to inform your employer that you have switched banks. You called and were told that the funds had been sent to the account you closed. At that instance, what do you think would happen to the funds? Will it disappear into thin air? Will it be stuck in your old bank account? Or will it be rejected? I bet you want to find out, and the answers you seek are in this article.
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If Your Bank Account Is Closed, What Happens to Your Direct Deposit?
Each day, several people take the bold step of closing their accounts. Yes, it is possible to close your bank account for whatever reasons. And of course, you might get pleas from the bank. However, they wouldn’t stop you from granting your wish, just as in most cases, you cannot stop a bank from closing your account. As a bank customer, you can close your account for a lot of reasons. But, the primary reasons why people shut their bank account are:
- Availability
- Bad customer service
- Personal reasons
- Dislike for a certain employee
- High-interest rates
- ATM availability
- Bank doesn’t value long term customers]
- The account isn’t in use
- Relocation
- Negative balance
Worthy to note is that, before you close your bank account, the bank will ensure that you are in good standing with them. This simply means that if you owe the bank, the bank won’t close your account until you settle your debt. So don’t think you can escape debt by shutting your bank account.
Usually, after closing your account, you are supposed to inform everyone of the change, including your employer. This will ensure that they send you money using your current bank account and not the former which you closed. Sometimes, however, you may forget to relay the information to your employer. Or, your employer may mistakenly add your old account number to the payroll and send your salary to an already closed bank account. When such happens, what will be the outcome? Can you still get the money back? Or should the money be forgotten?
You see, when you receive a direct deposit, it goes straight to your bank account, provided the account is still open. If the account is closed, the money has nowhere to go. It is like throwing a stone at a closed container, expecting it to get into the container. So in the event that your account is closed, the transaction will not be complete. What will happen afterward?
If the bank discovers that your account has been closed, it will contact your employer and notify them of the situation. Afterward, the bank will return the money to your employer. Your employer should contact you about a way to arrange repayment.
If the bank cannot reach your employer, they will contact you by mail using the most recent email you provided. If you are reachable, they will reissue the payment as a one-time paper check or to the new account you provide. If you aren’t reachable, the bank will retain the money for the amount of time as stated by your state. Afterward, your bank will present the funds to your state’s unclaimed property office.
Trust me; your bank wouldn’t concert money sent to your closed account for personal use. So, don’t fret! Provided you or your employer is reachable, you will get your money back.
Mind you, employers don’t usually issue a replacement check until the bank returns the money. So, if you know beforehand that the funds will be rejected, rather than waste time, you can contact your bank to determine if the money was returned to your employer. If so, your employer can call its bank to confirm that the funds are in its account. If they confirm and the funds are indeed in their account, you should be issued a replacement check right away.
To prevent paycheck delays, and if you know that your account is closed, cancel your direct deposit with your employer promptly for the upcoming payroll. This will ensure that funds aren’t sent to the closed account. In addition, it would save you from a lot of anxiety and your employer from the stress of issuing a repayment check.
Remember, your bank wouldn’t inform your employer that your account has been closed. It only does that after your employer sends money to the account. Thus, it is up to you to pass such information across to your employer.
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What Happens to Your Stimulus Check If Your Account Is Closed?
Everyone is always happy when they hear the news of an impending “stimulus check.” We all love free money, especially one from the government. While a stimulus check can make you happy, your happiness may be cut short when you realize that the check was sent to a closed account. At that point, you would surely want to know the outcome of your money. Is it gone, forever? Or can it still be recovered?
If your stimulus check were sent to an account you closed, it would bounce back to the IRS. Afterward, the IRS will send the stimulus as a paper check or a prepaid debit card.
Many things can make us scared, and a huge chunk of them are money-related issues. If your stimulus check is sent to your shut account, you don’t have to fret. Everything will be sorted out. However, it could take days or weeks as the IRS needs to get the money from the bank first.
