In this era of digital banking where most of them are going cashless and making payments online or using credit cards or debit cards, cards getting declined and transactions failing can be the worst nightmare. Though there can be several other causes for the bank cards getting declined or transaction failing, one of the reasons is when your bank account is frozen.
A frozen account is when you can’t make any transaction using your bank account. There are no withdrawals that can happen on the account. But you can deposit or transfer money into the frozen account. The freeze stops you from making any payments from the account through card, or cheque or even cash withdrawal at ATMs, or directly at the bank is not possible. If you have any automatic payments set on the account like home loans, credit card bills, utility bills, important transfers, then all this will be stopped. Your money in the account will stay put till the account gets unfrozen.
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There can be several reasons for a bank to freeze an account and the account holder needs to take a certain number of steps to get the account unfrozen and continue with the regular usage of the account.
Reasons your bank account is Frozen
As mentioned earlier, a bank might freeze your account for many reasons. Some of them are,
Suspicious Activity
Usually, banks do keep a track of the activities on your account. When there is a large sum of money debited from your account or a huge amount of transaction is made, this can alert the banks. Such activities can be suspicious when they usually don’t happen with your account. In such cases, the bank will freeze the account until further communication with you and provide proof about the same.
This can also be a step taken by banks to protect your money. When there is a huge withdrawal that happens from the account than your usual banking pattern then banks will freeze it to save you from fraudsters.
Suspicious activity in your includes
- A large amount of money deposited in the account from an unknown source
- Not answering any of the calls or messages from banks
- Constantly transferring a large amount of money to suspicious accounts
- Unpaid loans
This is one common reason for the banks to freeze the account. If you have unpaid debts from a bank or financial institution, then the bank can freeze your account until the issue is resolved.
If you hold a loan in another financial institution or bank, then the lender must serve an official court notice to your bank to freeze the account. If your loan account is at the same bank then the bank officials can freeze it without any court notice. Your account will be unfrozen once you negotiate with your lender or clear the debts.
Using the account for illegal activities
Your bank has the authority to freeze your account if you have used your account for any illegal activities. Purchasing high-risk materials using the account like firearms, highly precious metals, etc can make the banks suspicious and freeze the account until further clarification from the account holder.
How to unfreeze your bank account?
There are different approaches for different reasons to get your bank account unfroze. In the case of suspicious activities, you can visit the bank branch and explain to them the reason beyond the suspicious transactions that happened in your account. If the activities are not done by you then you can register a police complaint.
While in the case of unpaid debts, you can negotiate with your lender and satisfy their obligations. If the illegal activities are found to be true then there are chances that your account can get seized permanently along with the money in it.
Also, check: How to close your UAE bank account from abroad?
Dormant Account vs Frozen Account
A dormant account and a frozen account are NOT the same. A frozen account is when the bank freezes the account for multiple reasons while the dormant account is when there is no action on the account that is no transactions that are happening on the account for more than a specific time period then the account is considered a dormant account.
A dormant account can be activated easily by the account holder. They need to just visit the bank and provide an application for re-activation of the account while the process to get the frozen account activated is different.
Though the process of unfreezing an account is not that simple, during the process of unfreezing a bank account, all the account holder needs to do is cooperate with the bank and be transparent about the activities. But this can differ again in the case of illegal activities or debt-related issues in the account.