When your bank account has been compromised, it can wreak havoc on your finances. Unauthorized purchases and withdrawals can quickly drain your funds and leave you with nothing to pay your bills. You may wonder how to freeze your bank account to protect your money.
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What does it mean to freeze assets and bank accounts?
You cannot gain access to your money is what it means to freeze assets and bank accounts. If your bank account is frozen, you cannot withdraw funds, make purchases or transfer funds.
Some banks may let you deposit checks and transfer funds in. Your paycheck may continue to be directly deposited into your bank account. But you will only have access to your money once your bank account is no longer frozen.
Reasons to freeze your bank accounts
Freezing your bank account protects your money if you think someone has gained access to your account. There are many reasons to freeze bank accounts.
If you are a victim of identity theft, you should immediately freeze your bank account. When thieves gain access to your personal information, they can make unauthorized purchases or withdrawals from your bank account.
Placing a hold on your account can protect your money until the bank can implement other security measures. If you wait too long, you may have nothing left in your bank account.
Suspicious account activity
When you see charges you don’t recognize, there is a chance that your bank account may have been compromised. Freezing your account immediately can prevent further fraudulent purchases or withdrawals from coming out of your funds.
Lost or stolen debit card
A thief can access your account if your debit card or checkbook has been lost or stolen. By placing a hold on your account, you protect your funds from being withdrawn or spent without your authorization.
Freezing your bank accounts
The steps you need to take to freeze your account vary by bank. Sometimes, a bank lets you freeze your account through its app if you suspect identity theft or see transactions you do not recognize.
In other cases, the bank may require you to contact it by phone or in person. It is a good idea to call or visit your local bank branch to find out how to freeze your bank account.
What to know about a bank account freeze
A bank account freeze is not an everyday event. When it happens, you won’t have access to your money until the situation is solved.
How long does it take to unfreeze a bank account?
How long can your bank account be frozen for depends on who placed the original hold. When you request to freeze your account, the bank will immediately release the hold if you ask them to. Just keep in mind that you may still experience a delay when accessing your funds.
But if your bank placed the freeze, it may only lift this once you have fixed whatever issue caused the frozen bank account. The bank will likely ask you to verify your identity and recent transactions before releasing the hold. Depending on the bank’s policy, you may need to visit the branch in person.
But suppose the bank account freeze results from a creditor trying to collect unpaid debt. In that case, the bank may only be able to lift it once your outstanding debt is resolved.
Why would a bank freeze an account?
A bank may freeze your account to protect you. Freezing money can happen if your bank detects suspicious activity or purchases from unusual locations. Sometimes, your bank may alert you to suspicious activity to determine it should should block the transactions. You also have time to put safety measures, such as changing your account number, in place.
Your bank account could be frozen if you owe money. If you fall behind in paying your taxes or other obligations, a creditor can deliver a judgment against your account. Creditors can use this order to freeze or take funds from your bank account. Banks must follow the order and prevent you from using your funds until your debt is paid back or the creditor removes the judgment.
What should you do if the bank freezes your account?
When a bank freezes your account, the first step is to find out why. The account freeze could be the bank trying to protect your funds from fraud. Once you contact your bank and verify the transactions, it may decide to unfreeze your bank account.
But what if the bank has frozen your account because of unpaid debts? When the bank receives a judgment to freeze your account, it must comply immediately. The bank often won’t let you know ahead of time so you may not even realize your account is frozen until you try to make a purchase.
If your bank account is frozen, you need to find out who you owe to see whether you can reach an alternative resolution.
Freeze your bank account to protect your money
Freezing your bank account may be the best way to protect your money from fraudulent activity. A bank account freeze can be frustrating because you cannot get your money. But when you freeze your bank account, you gain some added time to put safety measures in place.
Can you withdraw money from a frozen account?
You cannot withdraw money from a frozen bank account.
What happens to the money in a frozen bank account?
The bank holds onto your funds when your bank account is frozen. If the bank placed the account freeze because of suspicious or fraudulent transactions, you gain access to your money when the freeze is lifted. But the bank may send your money to a creditor if that places a judgment on your account.
Which bank accounts can’t be frozen?
Some states may not allow IRS-designated trust accounts, such as pension, annuity, and individual retirement accounts, to be frozen.