How to Reopen a Closed Bank Account? – Bank Account Closed due to Overdraft!

Banking is not only an industry but is a wide-ranging concept that facilitates consumers for cash or fund accumulation, withdrawal, monthly or annual investments, and other monetary transactions. They enforce basic principles and fundamentals that align with the typical banking practice.

Banks and other financial platforms are considered critical pillars of a country‘s economy. They are responsible for further boosting investments and enhancing the rate of investment products and overall system activities.

Please read our article Does Overdraft Affect Credit Score?

The Bank account closed due to an overdraft.

If your bank account is closed due to an overdraft, you can not continue to write checks using that account. In that case, ask the bank to help you and tell you your fees and penalties before reporting to a credit bureau. Generally, banks may close bank accounts for any reason and without notice.

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Banks are responsible for dealing with monetary deposits, frequent withdrawals, currency exchange, Forex trading, and fund management. The credibility and association between the financial platforms or banks and customers are defined due to wealth management and the ability to provide credit facilities and services to their account holders.

Customers are expected to work according to banks’ policies that vary according to economic policies and implement regulations. Each back is equipped with unique and standard protocols and underlying conventions to facilitate the customers. The patrons should also be aware of their respective policies and adhere to them to avoid misunderstandings and malfunction of their accounts.

Customers or account holders should be well acquainted with the bank’s specifications to continue and uphold the bank policies. Failure to do so can result in your account being temporarily closed or suspended. Therefore, it is imperative to understand and acquire firsthand insight and information about the hidden and open policies to avoid the situation. Furthermore, your account may experience severe complications if mishandling is evident.

How to Reopen a Closed Bank Account?

If your bank account was closed due to overdraft, you could reopen it by taking the following steps:

  • Contact your bank and inquire about the reason for account closure.
  • Ask if it’s possible to reopen the account, and if so, what steps you need to take.
  • If necessary, pay off any outstanding debts or overdraft fees to clear the negative balance.
  • Provide any additional documentation or information requested by the bank.
  • Consider opening a new account with a different bank if your previous bank refuses to reopen your account.

Remember that each bank has its policies, and not all banks will be willing to reopen a closed account. Also, some banks may not approve your application for a new account if you have a history of excessive overdrafts.

To reopen a closed bank account, you need to talk with a bank representative and pay all fees and penalties if your account was closed because of a negative balance. However, each bank has a different policy, and some banks can refuse to reopen your account even if you pay your debt.

Your bank account closure reason is a significant fact will be able to reopen your account. For example, if your card was stolen or you were accused of fraudulent activity, and you had nothing to do with it, then most banks will reopen your account.

It is evident that bad credit history and financial background negatively impede your legal processes and formalities. If you wish to conclude your legal responsibilities hassle-free, preventing bank-related problems, especially overdraft and overdrawn techniques, is essential.

You are also subjected to legal formalities if you continue to use a suspended account for financial transactions. This way, a retailer could sue you in several claims for the particular amount you owe. You must try this offense if you write checks through a temporarily suspended account. You could be gravely convicted for writing bad checks, face imprisonment, or pay monetary compensation.

The credit history can be seriously damaged if the bank imposes closure on the account. However, if the account holder closes the account before getting into administrative problems, it will not influence financial reputation, per the Consumer Financial Protection Bureau. Try to settle your dues with the bank administrator to avoid such a situation. The manager could also arrange a series of payments and prevent you from drowning in debt.

The bank closed my account. Can I open another one?

Yes, you can open another one only if you pay all your debts and penalties. However, Suppose your bank closed your account due to a stolen (or lost) debit card or fraudulent activity for which you are not responsible. In that case, the bank will usually open another account immediately.

The bank is to provide ultimate guidance and priority to the customers; however, if the customers fail to meet the expectations and regulations of the bank, then they have the right to close or adjourn the account, particularly if the bill becomes overdrawn. If you own a checking account, the bank is not responsible for providing additional information regarding the bank balance.

The bank can heavily penalize you for performing an overdraft which is the act of withdrawing cash or funds more than the cash availability, whereas overdrawn is also reprimanded by the bank authorities, which is then defined by a negative account balance. If the account holders negate the bank’s policy for overdraft and overdrawn cash experience, then your account is expected to suspend temporarily or undergo other financial processes to be penalized.

In addition to temporarily suspending your account, you may experience other financial drawbacks and limitations if you have rendered your account vulnerable to overdraft and overdrawn concepts. Once you have misread your account’s reputation by withdrawing more funds than the threshold amount, it may further reduce your chances of creating a new account in the same financial institution or bank. In this situation, the bank will meticulously analyze and double-check your current status if you have applied to a new account. In a similar bank and other financial platforms, potential customers are expected to experience inconveniences while opening a new bank account in a different bank.

The banking community is tightly knit and may report individual findings and share them; therefore, if you have performed an overdrawn cash act with a drawl. The customers can undergo a detailed investigation. The former bank will label your account as an overdrawn or overdraft account and close or suspend it through an agency called ChexSystems. This company is responsible for keeping an eye on all accounts, and their account holders undertake the activities. This company acquires financial documentation and records of each account, whether previous or current. Even if you have successfully paid your overdraft fee, even then, you will be well known and mentioned in their database as an account holder performing the overdraft function.

Can I close my bank account if I owe money?

If you owe money and have a negative balance, the bank usually will refuse to close your account. The bank will ask you to pay all your fees and penalties before closing the account. The bank can close your account and send the debt to a collection agency if you do not pay.

Suppose your current account has been suspended, and you wish to open a new functional account in another bank to carry out everyday financial transactions. In that case, your case will be prioritized and given to the agencies or authorities for a comprehensive credential check. There is a possibility of being overruled as the bank authorities may refuse the application considering the history.

Even if the new bank allows you to open a new account, you may enjoy limited financial services. The bank may put financial limitations or provide you with the type of account with less monetary independence. If opening up a new account is problematic for you, you can consider opening an account in a bank that offers second chances for checking accounts.

If your account has been suspended for a prolonged period, the vendors may no longer accept checks from your account. This situation arises if that verification agency or system highlights your blunder or mishap, adversely increasing their decision.

For example, the vendors may refuse to accept checks from your account because of the negatively labeled background of your account. Different investigative company such as TeleCheck and CrossCheck mainly consists of personal information and account insights through which they can easily relate to your case. However, these companies are known to keep an electronic accumulation of personal information, which may seriously impede check acceptance in a store; for example, a cashier at any retailer may have the info often accumulated through a driver’s license.

Daniel Smith

Daniel Smith

Daniel Smith is an experienced economist and financial analyst from Utah. He has been in finance for nearly two decades, having worked as a senior analyst for Wells Fargo Bank for 19 years. After leaving Wells Fargo Bank in 2014, Daniel began a career as a finance consultant, advising companies and individuals on economic policy, labor relations, and financial management. At, Daniel writes about personal finance topics, value estimation, budgeting strategies, retirement planning, and portfolio diversification. Read more on Daniel Smith's biography page. Contact Daniel:

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