4 Reasons Your Bank Might Close Your Account

Talk about a bad day: Imagine attempting to log into your bank's website, only to learn that your checking account has been closed without your consent. If this happens to you, you'll need to get in touch with the bank ASAP and see if you can reopen the account. If your bank says no, you'll have to open a new account and reroute all your existing automatic payments and direct deposits. What a pain! But why did this happen to you? Was it something you said? Probably not. But it could have been for one of these reasons.

1. Making suspicious transactions

The banking transactions that tend to raise red flags most often involve cash, so if you move a lot of cash in and out of your account, it's not outside the realm of possibility that your bank could close it. $10,000 is the magic number here -- if you withdraw or deposit more than $10,000 in cash, your bank is required to report it to FinCEN (the U.S. Treasury's Financial Crimes Enforcement Network) under the terms of the Bank Secrecy Act of 1970.

And don't think you can split up a deposit into smaller amounts to get around this -- that's a red flag, too. If you're making legitimate transactions, you have nothing to worry about. Just know that big transactions are observed and reported. And if you're being shady, your bank will catch on and close your account.

2. Being unresponsive

Communication is one of the most important parts of many aspects of human life, including work and interpersonal relationships. Why would it be any different for your working relationship with your bank? If you decide to ignore any communications from your bank (such as phone calls, letters, or emails) regarding your accounts, you could find yourself losing those accounts. Similarly, if you start a new business and start dealing with a lot more money, or making different kinds or sizes of deposits, call your bank and explain yourself.

If your bank requests pay stubs or other proof of reasons why your financial activities have changed, provide them. Banking is a two-way relationship, and if you drop the ball on your end, your bank is within its rights to end the relationship by closing your account.

3. Using checks for payments

It's unfortunate, but check fraud is rampant these days. According to FinCEN, it's about doubled since 2021. A lot of us have switched away from using checks altogether; to use myself as an example, I've written exactly one check in the last year, to pay my city for an on-street parking pass. Other payment methods offer better consumer protections and are just generally faster and more convenient -- plus, while check washing is a thing, there is no equivalent for credit cards.

So if you rely heavily on checks to complete your everyday financial transactions, you could be at risk. And it stands to reason that your bank may not be thrilled to do business with you if you report losses due to check fraud. If you have to use checks, don't mail them if you can avoid it, and don't accept them from people you don't know.

4. Constantly overdrafting your account

This last reason for a surprise account closure is a bit more straightforward. If you're having difficulty keeping your account funded and are frequently overspending what you have and ending up in the red, that's not good. Your bank will charge you fees (unless you have overdraft protection enabled -- this usually isn't free, though), and if you don't put money in the account to get yourself back in the black, you could find your account closed.

Unfortunately that still won't save you -- you'll have to repay the money or see the bill sent to collections. And you could end up with a big black mark on your ChexSystems report, which might make it difficult to open a new account in the future.

Banks are businesses, and it stands to reason that they want to keep customers who are easy to work with and throw up minimal red flags with their banking activities. Watch out for these moves, and you should be able to keep your banking relationships solid.