If you ever get the feeling sometimes that your bank isn’t all that interested in you as a customer, don’t assume you’re being paranoid. After all, as the old saying goes, you’re only paranoid when you’re wrong. Banks do sometimes drop customers. In case you’re feeling like you could soon be without a bank account, here are some reasons financial institutions sometimes kick customers to the curb.
You owe the bank money. This is by far the most common reason any consumer is dumped by their bank. Nina Heck has seen this happen a lot. Heck is the advocacy director and assistant to the CEO at Guidewell Financial Solutions, a Baltimore-based credit and debt counseling service.
[See: What to Do If You’ve Fallen (Way) Behind on Your Credit Card Payments .]
“Typically, people have had a lot of overdrafts, and they’re not able to pay them,” Heck says, adding that generally, the clients they see “have had something major happen, like a loss of income, and that usually they don’t have any savings to draw upon. These customers end up seeing their bank account go into the negative, and they never recover.”
If you can’t pay your bank back, that’s when you could see your account shut down; check with your bank manager, but usually banks want you to pay within a month before they’ll consider closing your account.
One important thing to remember: If you’re constantly owing the bank money, but you’re paying them back quickly, you’re probably in fine shape and not likely going to be dropped, according to Heck.
Naturally — if you’re perpetually paying overdraft fees, you’re something of a cash cow. According to a Federal Deposit Insurance Corporation report that collected data from 600 banks, in the first quarter of 2016, $2.7 billion in overdraft fees were collected.
[See: 10 Easy Ways to Pay Off Debt.]
On the other hand, if your account is constantly in the negative, and you’re paying the bank back but doing it slowly, and taking weeks instead of days, you could see yourself shown the exit door, says Matthew Huling, a credit counselor with Clearpoint Credit Counseling Solutions in Rochester, New York.
“Eventually the banks get tired of dealing with the problem account and close it,” Huling says, adding that this generally happens when the bank staff feels as if they have to chase the customer down to get the bank account paid off. Huling says he was in the banking business for several years, and that was the one of the most frequent reasons customers were dropped from a bank.
You have kept the account empty for a while. Some people switch bank accounts or leave them open after getting new ones, the idea being that maybe they’ll need that old one again at some point. That’s fine, as long as you give the account a little love.
“Some banks drop customers due to inactivity on their accounts,” says Tamika Exum, a credit counselor at Clearpoint Credit Counseling Solutions in Greensboro, North Carolina. “If customers don’t have any funds or haven’t had any funds in the account for a certain time frame, the banks may close the account.”
Now keep in mind that it’s the account that will close, according to Exum. If you have multiple accounts at a bank, for instance, and only one account is empty, you’ll likely only lose that account — and not be booted from the bank entirely.
[See: 12 Simple Ways to Raise Your Credit Score.]
Your partner is misusing your bank account. Obviously, if you’re misusing your account, you could be booted, but that’s common sense. But if you have a joint account, it’s worth remembering that your partner, be it a spouse, boyfriend, girlfriend or business partner, could get you in trouble. You probably have nothing to worry about, unless, of course, you can imagine your partner stretching the bounds of what banks find permissible — like writing checks when there’s no money in the account.
“You’d be surprised at the number of spouses or partners that might get caught up in something like this and not even know it because they are not privy to the account info, since it is controlled by the other person,” says Sandra Rains, financial education specialist with Clearpoint Credit Counseling Solutions in Tampa, Florida. She adds: “If your name is on the account, then both parties are liable.”
How to recover. Frankly, there isn’t much you can do, other than talk to your bank manager and hope for some mercy (and if you owe money, promptly pay the bank back). But paying your bank back isn’t a guarantee you’ll get back in your bank’s good graces; if you end up owing money to your bank, you’ll likely find yourself on a list compiled by ChexSystems, a consumer credit reporting agency headquartered in Woodbury, Minnesota. If your name is on that list, many banks will deem you too risky for an account, and you may discover that you’ve been blacklisted by many banks.
Some financial institutions, however, have “second chance checking” programs, in which they’ll work with customers who can’t get bank accounts, and John Rosenfeld, an executive vice president at Citizens Bank, asserts that his bank works well with the unbanked.
“Anyone who has gotten into ChexSystems or has been dropped by their bank should come into a Citizens branch,” Rosenfeld says.
Some credit counseling services offer assistance to the unbanked, as well.
Generally, these programs are tightly structured with limits on how many debit charges customers can make, or you might find that you have to enroll in a money-management program. That’s both the good and bad news of being unbanked. You may have been shown the exit, and the door may have locked behind you. But if you’re willing to work for it, almost every bank will give you a key to get back inside.
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Help! My Bank Dumped Me originally appeared on usnews.com
