Establishing a savings account with a bank involves entering into an agreement to abide by the bank's rules and regulations or risk the potential for your account to be closed. In most instances, the bank will provide you with a contractual agreement when you open your account which stipulates the terms you must operate under and the repercussions for failing to do so. As with many business agreements, banks typically have clauses and terminology in their contracts that allow them to justify closing an account for a variety of reasons under the vague umbrella of “account abuse". With that in mind, it may appear they have the power close your savings account at a point they deem acceptable.
Savings Account Requirements
While all banks have slightly different requirements for savings account holders, there are some standard requests most banks make of their patrons, such as maintaining a specific balance or keeping an account in good standing. You may also be asked to link your checking account to your savings account and give the bank permission to transfer funds to cover overdrafts if the need arises. There may also be an "inactivity" clause in which a bank may close your account after a period of time, though they will be required to refund your balance as part of the process.
Red Flags for Banks
Banks are in the business of making money via loans and other financial products, so it's in their best interest for you to keep your savings account open and active. Closure may be carried out if the bank suspects fraud, if your account is regularly overdrawn or if you make deposits that bounce. If you don’t maintain a minimum balance or make regular payments on bank-issued loans, credit cards or lines of credit, those can also be acceptable reasons for a bank to close your account.
What You Can Do
You can reduce the potential for having your savings account unexpectedly closed for no reason by reading all bank policies and abiding by account maintenance terms. Even if your savings account is in good standing you could risk having all of your accounts closed by the bank if you have other accounts that are in violation of bank policy. Always maintain a current address on file with your bank so that if you are in violation of rules or at risk for closure, the bank can reach out to you in advance. Most banks have a policy of notifying you of closure plans well in advance of actually closing the account. They may even offer steps you can take to prevent the closure of the account, which gives you a chance to remedy the situation.
- Comptroller of the Currency Administrator of National Banks: Answers about Closing Bank Accounts
- Comptroller of the Currency Administrator of National Banks: Answers About Bank Accounts
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Lisa McQuerrey has been an award-winning writer and author for more than 25 years. She specializes in business, finance, workplace/career and education. Publications she’s written for include Southwest Exchange and InBusiness Las Vegas.