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- Your bank account may be put on hold if a bank suspects fraud or you have unpaid debt.
- You won't be able to transfer or withdraw money from a frozen bank account.
- To restore access, you may need to verify your transaction history or repay your debt.
Financial institutions may place a hold on your bank account, limiting your ability to access your money.
To help you determine if you have a frozen bank account, we'll provide an overview of why your account may have a hold and what you can do to resolve the issue.
What is a frozen bank account?
A frozen bank account is one that does not allow outgoing transfers or withdrawals. You may be able to view your account, but you won't be able to move or spend money.
"If you've got a bankruptcy, or if you've got your wages garnished for a tax thing, or because you owe back child support, certain money in the account can be frozen from the account owner because someone else has a claim on it," explains Bruce Adams, president and CEO of the Credit Union League of Connecticut.
However, up to two months of Social Security and other government benefit payments are required to remain accessible to the account owner even when the account is frozen.
Reasons for account freezing
Either a financial institution or business may place a hold on a bank account. Here are some of the most common reasons why bank account freezes occur.
A financial institution suspects fraud
If a financial institution finds strange money patterns happening in a specific account, Adams says it may suspect fraud.
"Both according to the law and according to the account agreement that the owner signs, they could put a pause on the account to investigate," Adams says. In extreme cases they may close the bank account without notice.
An account owner has died
Financial institutions may also freeze a bank account if a bank account owner dies and there isn't a bank account beneficiary.
"If somebody comes in wanting to drain the account, the financial institution cannot give them money while they figure it out," says Adams.
A bank will have to go through probate, and it may take months before anyone can access money in the account.
An account owner owes money
A creditor may place a hold on your account if you owe money and haven't kept up with payments.
For example, your bank account may be put on hold if you have significant unpaid debts to a business or government entity. Typically banks are not required to give the account holder notice before the account is frozen, but state laws vary.
A financial institution also might place a hold on your account if you have significant common bank fees.
"There are overdraft protection products where the institution will say, 'If you bounce a check, we'll pay it and then take it back out of your savings, and there will be a fee on that," says Adams. "But the terms of the account might say if you do it 10 times in a month, we're just going to freeze your account."
Steps to unfreeze your account
1. Contact your bank
Calling your bank is usually the quickest way to find out why your account is frozen and what you can do to regain access.
2. Resolve the issue
You may be able to have your issue resolved quickly, depending on your situation.
For example, Adams says if your account was frozen because the bank suspected fraud, you can talk to a banker about your recent transaction history. After providing a receipt or additional information, the financial institution may take off the hold on your account on the same day.
However, if your account is frozen by a creditor or the primary account holder died, you might need to take additional steps, such as going through probate or bankruptcy. This may take months to resolve.
3. Stop payments
If your bank account isn't going to be restored within a day or two, stop all ingoing and outgoing payments.
If you get paid via direct deposit into that account, for example, log on to your payroll provider and change the account as soon as possible so you don't lose access to your paychecks while the account is frozen.
Outgoing transfers, such as online bill pay, will not go through when your bank account is frozen. Call service providers and give them new payment information for bills and subscriptions.
4. Get legal advice, if needed
If your issue has to do with creditors or the federal government seeking unpaid debts, it may be a good idea to retain legal counsel.
Preventing future freezes
It's important to monitor your account activity for authorized transactions and flag them to your bank immediately. Also, be sure to notify your bank of any upcoming travel if you plan to use a debit card linked to the account during your trip.
If you have outstanding debt and are struggling to repay it, talk to your creditor about setting up a payment plan.
Frozen Bank Account FAQs
Why do banks freeze accounts?
Even the best banks may freeze accounts due to suspected fraud or by order of a legal judgment from a creditor claiming unpaid debts. An account may also be frozen when an account owner dies without naming a beneficiary.
What should I do if my bank account is frozen?
Call your bank immediately to find out why your account was frozen and what you can do to regain access. Be prepared to provide documentation.
How long can my account remain frozen?
It depends on the cause of the freeze and how quickly the bank can get the issue resolved. A legal judgment or probate situation could take months.
Can I open a new bank account if my bank account is frozen?
You may be able to open another account at a different bank, depending on the reason for the freeze.
How can I prevent my bank account from being frozen in the future?
Monitor your account regularly for suspicious activity and stay on top of your debt payments.
Banking Editor
Sophia Acevedo is a banking editor at Business Insider. She is a banking expert, and has about three years of experience reviewing banking products and analyzing savings and CD trends.Sophia oversees Personal Finance Insider's banking vertical. She edits and writes bank reviews, banking guides, and banking, budgeting, and savings articles for the Personal Finance Insider team.Sophia joined Business Insider in July 2021. Sophia is an alumna of California State University Fullerton, where she studied journalism and minored in political science. She is based in Southern California.You can reach out to her on Twitter at @sophieacvdo or email [email protected].Read more about how Personal Finance Insider chooses, rates, and covers financial products and services »Below are links to some of her most popular stories:
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