Why does the bank keep accepting charges when my account is closed? (2024)

FAQs

Why does the bank keep accepting charges when my account is closed? ›

Generally, a recurring charge is based on an agreement between you, as the account holder, and the merchant. Because the bank was not a party to that agreement, the bank cannot cancel it for you. You need to instruct the merchant to stop debiting your account before you close the account.

Automatic Payments

If you have set up recurring debits to your checking account, closing the account won't automatically cancel them.

Yes, you may be responsible for certain interest charges and fees.

The receiving bank rejects the transaction

If a bank receives a transfer or direct deposit to a closed account, it may reject the transaction outright. Depending on how quickly this happens, the money may never leave the sender's account, or it may get returned several days later.

Of course, the bank must return any remaining funds in your account but may hold on to them to cover any negative balance or fees. In some cases, the bank may hold the funds if your account is flagged for suspicious activities, which is increasingly common.

Generally, a recurring charge is based on an agreement between you, as the account holder, and the merchant. Because the bank was not a party to that agreement, the bank cannot cancel it for you. You need to instruct the merchant to stop debiting your account before you close the account.

What can I do? Write directly to the vendor/merchant to request no further debits to your checking account. You should provide the bank with a copy of the letter and inform the bank that these charges are no longer authorized. Keep a copy of the letter for your records.

Can the bank continue to charge interest and fees? Yes. The bank may charge you for interest and fees that were assessed before you closed your account. Review your account agreement for information on how finance charges are calculated on your account, or contact your bank.

Closing an account also does not mean you no longer owe the balance, though a card issuer may transfer a past-due account to a collection agency.

Once your credit card is closed, you can no longer use that credit card, but you are still responsible for paying any balance you owe to the creditor. In most situations, creditors will not reopen closed accounts.

Can I still use my debit card if my account is closed? ›

You should receive a notification from your bank if your account is closed. You may notice you cannot access your funds or use your debit card. You can also contact the bank directly to confirm whether your account has been closed.

Generally, a bank may take money from your deposit account to make a payment on a separate debt that you owe to the bank, such as a car loan, if you are not paying that loan on time and the terms of your contract(s) with the bank allow it. This is called the right of offset.

Another option is to ask your bank for a stop payment order. This request directs your bank to stop making future payments to a company. You can give the order in person or over the phone, but whichever you choose, it's always best to get it in writing and do so promptly before the next payment is scheduled.

No money will be exchanged. The funds will remain with the sender. If the transfer already took place and an account can't be found, the bank will likely send the transfer back the same way it arrived.

A closed account refers to a deactivated or terminated account; in other words, it's no longer open and available for deposits and withdrawals.

For the most part, if you keep your money at an institution that's FDIC-insured, your money is safe — at least up to $250,000 in accounts at the failing institution. You're guaranteed that $250,000, and if the bank is acquired, even amounts over the limit may be smoothly transferred to the new bank.

If you close a bank account, companies and vendors will no longer be able to automatically deduct monthly payments tied to that account. You will have to make other arrangements to pay what you owe or discontinue any service agreements.

Stopping a card payment

Your card issuer has no right to insist that you ask the company taking the payment first. They have to stop the payments if you ask them to. If you ask to stop a payment, the card issuer should investigate each case on its own merit.

Once your credit card is closed, you can no longer use that credit card, but you are still responsible for paying any balance you owe to the creditor. In most situations, creditors will not reopen closed accounts.