What happens when a bank closes your account for suspicious activity

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• Banks may close an account if it's inactive, has a lot of overdraft fees, or there's identity theft.
• You might be able to file a complaint with the Consumer Protection Bureau if it wasn't your fault.
• You usually can't reopen a closed account, but you'll still be able to open a new one.
• Read about what you'll need to open a bank account on Insider. 

Involuntary bank account closures usually occur when a financial institution detects unusual activity in a bank account. 

If a bank account has closed your account, here are a few steps to take so that you'll resolve any potential issues and avoid this situation in the future. 

Why a bank might close your bank account

A bank may decide to close your bank account if any of the following circumstances take place: 

• Your account has been inactive for a long time. According to the Office of the Comptroller, financial institutions might consider a bank account abandoned if it hasn't been used for three to five years. As a result, it will close your bank account and contact you to return any money deposited in your account.
• Significant overdraft fees keep piling up. If you avoid paying overdraft fees, a bank may decide to close your account since it's uncertain whether your account is safe. 
• A bank suspects identity theft. A bank may think your bank account has been hacked if it notices you're making big purchases and you haven't responded to bank notifications. To prevent any possible malicious activity, a financial institution will suspend activity.

What to do if it wasn't your fault

Unfortunately, when a bank account is involuntarily closed, it could potentially affect you when you open accounts in the future.

Checking account reporting companies report information about checking accounts. If your account had significant unpaid fees, checking account reporting companies can pass this information onto new financial institutions where you might not be able to open a new account. According to the Consumer Financial Protection Bureau, this may affect you for up to seven years after your bank account is closed.

If your account was closed due to identity theft or for another circumstance that wasn't your fault, you'll need to resolve this issue so that it doesn't affect future accounts. 

To resolve an involuntary bank account, the Consumer Financial Protection Bureau recommends you first review your checking account history by reaching out to the company on this list.

If you're unable to resolve the issue, the Consumer Financial Protection Bureau also lets you submit a complaint.

Once a complaint is submitted, the Consumer Financial Protection Bureau will reach out to any company that can address your problem, so you get a response back.

Any issues reported to the Consumer Financial Protection Bureau are also stored in a database so that the agency can monitor companies better and enforce laws.

Can you reopen a closed bank account? 

In most circumstances, once a bank account is closed it can't be reopened. You'll have to open a new bank account with your institution or bank somewhere else if you're unable to find an account that interests you. 

How to maintain a new bank account

When you open a new bank account, you'll need to monitor it to ensure you don't wind up in the same situation again. Here are a few tips to maintain your new bank account so that it isn't closed by a financial institution.

• Find a new account that you'll qualify for. If your account was closed because you had to pay significant overdraft fees, you still may be able to open a new account. Low-risk bank accounts, prepaid debit cards, and free overdraft protection are worth exploring.
• Add direct deposit to your account. To prevent inactivity in your account, you might want to consider adding direct deposit to your account so that money automatically goes into your account every month. 
• Utilize a budget app that will link to your bank account. If you like getting a bigger picture about how you use your money, a budget app might also help with monitoring your account. Our guide includes some of the best budget apps, depending on your circumstance.

Sophia Acevedo, CEPF

Junior Banking Reporter

Sophia Acevedo is a junior banking reporter at Insider who covers banking and savings for Personal Finance Insider. She is also a Certified Educator in Personal Finance (CEPF). She joined Insider in July 2021 as a fellow for the Personal Finance Insider Reviews team. Before joining the Insider team, she was a freelancer based in Los Angeles and worked briefly in publishing. She also graduated from California State University Fullerton in 2020. You can reach out to her on Twitter at @sophieacvdo or send a quick email at . Read more about how Personal Finance Insider chooses, rates, and covers financial products and services >>

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