What Is a Zombie Bank Account?

Barbara Jones
Checking Credit Card

ZombieBankA zombie bank account!?! That’s scary sounding, but what does it mean? Zombie banking refers to a practice by banks, who actually reopen closed checking accounts, without notifying the account holder! The bank account “comes back from the dead”.

When a Closed Account Comes Back to LIfe

Several of the largest banks in the U.S. reserve the right (read the small print) to reopen closed accounts if a credit or debit is posted to the account. Instead of declining the transaction, they reopen the account, often times without notifying the account holder and clear the transaction. Bank of America, Chase, and Fifth Third Bank are just 3 of the many financial institutions with such practices, which are actually outlined in the checking account agreements. And, they are NOT required to notify you.

Racking Up Frees on Closed Accounts

If you have Direct Deposit or some type of automatic debit payment in place for bill payments and you have closed your checking account, you are responsible for changing the payment information to the new account. In this modern era, when so many are practising mobile banking and online billing, it is understandable how an online debit of some kind might be missed when closing and reopening a new account with a different bank. Careful though, as this could mean an accumulation of a lot to different fees.

Amazingly, let’s say you have an Account with Bank of America, but you forgot to change over a small utility bill, let’s say around $30. Not all companies bill on a thirty day basis, so it might go missed if you only check within a month or two after closing the prior account. You can accumulate overdraft fees, like Chases’ $34 fee. And, remember, they do not have to notify you of any of this! And, there are “Extended Overdraft Fees”, which after five days will cost you another $15. Let’s also add the monthly maintenance fee of $12. We are now at $61 for what was only a $30 bill… the first month alone!

The Consumers and Union reported recently that some banks charge fees for closing accounts that have been opened for less than a 90-period. So, you could also be charged more fees to close your zombie account! Again, the banks DO NOT HAVE TO NOTIFY YOU. Zombie account holders might not even be aware of this until they receive a statement in the mail for the closed account.

Resources for Consumers

The Consumer Financial Protection Bureau does have an online form to file complaints if you have any issues destroying a zombie account. Log in to their website and log a complaint, which they will log and put the offending bank on notice on your behalf.

Bank Of The Dead, the Zombie Banking Apocalypse!