Why US banks close accounts, and how to keep yours open
Banks keep reviewing an account long after they open it. What tends to prompt a review, and the habits that keep an account in good standing.
Why do US banks close accounts after they have opened them?
When a bank opens an account, it records what you told it, and from then on its systems compare the account with that picture. Most account holders never notice the review, because it finds nothing worth asking about. An account draws attention when what happens in it stops matching what the bank was told.
Opening is the start of the bank’s review, not the end.
When a bank opens an account, it records what you told it: who you are, where you live, what the business does, where the money comes from and roughly how much will move each month. From then on, its systems compare the account with that picture, for as long as the account is open. Fintech platforms run the same kind of review.
Most account holders never notice it. It runs in the background and finds nothing worth asking about. An account draws attention when what happens in it stops matching what the bank was told, and the bank has to look into the difference.
What tends to prompt a review.
A review usually starts with a change the bank didn’t expect. These are the ones we see most often.
- Large transfers that don’t fit the stated business
- Money from people or countries never mentioned
- A sudden rise in volume after quiet months
- A change of address the bank hears about late
- Activity unrelated to what the company does
Banks rarely explain a closure.
When a bank decides to close an account, it usually sends a short letter with a date and little else. Banks are often not allowed to say what prompted a review, and many keep their reasons to themselves even when they could share them. Calling the branch rarely changes the answer.
What you can control is everything before that letter. Most closures we see follow questions that went unanswered, answers that came late, or activity that drifted from what the bank was told.
When the bank writes, answer quickly and completely.
A request for information is the bank giving you the chance to explain. Treat it as the most important letter of the month, and answer it in this order.
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Read exactly what is asked
Banks ask precise questions and expect precise answers. List each item they want and the date they want it by, before you start gathering anything.
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Gather the documents that answer it
Invoices, contracts and statements carry more weight than a letter describing them. Send the papers that show what each payment was, who it came from and why.
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Answer every point in one reply
A partial answer usually brings a second request, and the deadline keeps running. Answer each question in the order the bank asked it, in plain words.
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Keep a copy of everything
Keep the request, your reply and every attachment together. If the bank asks again later, or a new bank asks why you moved, you have the record.
Keep your details current and true.
The bank checks what it sees against what it holds on file, so details that have gone out of date look like details that were wrong. Update your phone number, the company’s activity and its owners before the bank learns of them elsewhere.
Use the account for what you said it was for.
An account opened for a software company’s client payments should mostly show client payments and the company’s costs. When the same account starts paying personal bills, receiving money for a relative or moving funds for another business, the bank’s picture stops fitting, and a review starts.
Keep business and personal money in separate accounts, and each company’s money in its own. If the business changes, tell the bank before the new payments arrive, and keep every transfer easy to follow.
Tell your banker before anything unusual.
A large one-off payment, a property purchase, the proceeds from selling a company, a month of unusually high spending: each is ordinary for the person making it and unexpected for the bank. Explained in advance, it is a note on file. Found by the bank’s systems, it becomes a question with a deadline.
A short email to your banker a few days ahead is enough: what is coming, why, and a document that shows it. Keep the reply. If you have no named banker, ask the bank how it prefers to be told.
If an account closes, the next bank will ask why.
A closure follows you. Account applications often ask whether a bank has closed an account of yours, and some banks share records of closures. A new bank will want to know what happened, and it will weigh the answer. It also costs time on the route from a US company to US credit, since the relationship a card team reads starts again.
The best answer is a short, true account of the reason, with documents showing it was resolved. This is where the copies you kept matter. A new business account opened from abroad starts with that explanation, and so does a personal account opened from abroad.
We can help you be more efficient.
It reads like a lot from the outside. We take care of the steps, line them up in the right order and tell you what comes next, so you only do the parts that need you.
