Capital One Bank Really Doesn’t Like Inactive Checking Accounts…

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Banks aren’t as wildly profitable anymore, and thus are looking for ways to bring back the bucks. They’ve added new “features” like debit card fees, and are dropping unprofitable customers. For example, people with zero balances and little activity still cost money in the form of generating statements, 1099s, and such. Well, MMB reader Mike experienced firsthand how much Capital One Bank doesn’t like inactive checking accounts.

Even though he has biweekly direct deposits into his account, his account suddenly disappeared one day from online banking. It’s the primary fear of online-only accounts; what happens if they simply say my money doesn’t exist? After contacting them, what was the reason given for closing without notice? A $0 balance for just five consecutive days. Here are some excerpts of his exchange with customer service:

We understand you are inquiring about the status of your checking account. Your checking account ending in XXXX was closed on 08/19/2011 after an extended period with a zero balance. We apologize for any inconvenience this may cause. To have your account reactivated, please confirm you mailing address and phone number by secure message.

In regards to your question of $2,000 deposit once a month, our records indicate this last deposit made into the account was on 08/12/2011 for $2,278.44. Following this deposit on 08/12/2011 there was a withdrawal of $2,278.44, followed by a $20.00 ATM withdrawal on 08/15/2011 leaving the balance of this account at $0.00. Once the account has a zero balance for five consecutive days, it will close automatically and no longer appear in your online banking profile.

In the past, banks like EmigrantDirect also closed zero balance accounts without warning, but only after at least a month of inactivity. Watch out, banks are becoming even less friendly than before.

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  1. I’ve experienced this with more than a few banks I’ve used previously. I don’t know if the “timeout” was five days, or a month, but I found it to be convenient. Rather than having to call the bank or stop by a branch (for brick and mortar operations), when I’ve wanted to close an account in the past, I ACH all the money out of the account to the new bank and never look back. I still keep some of my accounts at a “zero” balance by leaving a penny in them as a placeholder. Usually in the case where I have a checking and savings account at the same bank, I get my direct deposit, pay bills, and transfer the remainder to savings thereby not leaving but a penny in the lower interest checking account.

  2. The same thing happened to me with my Chase checking account recently even though I direct deposit $500 bi-weekly. They didn’t even tell me. I logged in and the account was missing. I was shocked. I guess they don’t like it when you withdrawal everything the same day. Now I just keep $5 in there to keep them from closing it.

  3. seems absolutely logical for them to close it. i’ll bet it’s in the account agreement contract that they will do this.

    what’s the problem?

  4. I had no idea before this blog post that you could bring a bank balance to $0 and not close an account. I’m serious, I would think that would be automatic, not even a week. I seem to remember when I signed up for ING years ago they said you have to keep $1 in there. Why would you not keep even $1 in a bank account you intended to hold onto?

    Now, I’ve had $6.76 in a Wachovia checking account for the last six years since I switched to online banking and thought I’d hold onto the account in case I ever needed a big brick and mortar bank again. Once during that time, they asked me to log in and verify that I still wanted the account or else they’d close it. Hopefully, they let me hold onto it, but if they ditch me, it’ll just be some other major bank I go to if I ever want a big B&M bank again, so their loss.

  5. I think the title of this article is a bit misleading. It seems that they closed the account because it had a 0 balance, not because it was “inactive”. If $.01 or $1 had been left in the account, it wouldn’t have been closed. Just like Stan, I like this feature because when I no longer want an account I just transfer all of the funds out and call to confirm that the account is closed.

  6. I used to have a lot of checking accounts in different banks but never experienced such a utter BS, LOL.

    A lot of people live from a check to check, and what happens when your salary is not deposited because the account was closed.

    Good luck with Capital One’s clients retention if they pissed off their customers.

  7. I think it’s crazy and agree with Mcov. My checking account always has less 1 dollar. When I get paid, I pay my bills and transfer the rest to savings. I guess I am lucky to never have had a bill where the cents brought be to exactly $0.00.

  8. I have an Astoria Federal Savings checking account that was closed overnight when it got to a zero balance – less than 24hr at $0, with an in-process ACH transfer of money going in (which then got rejected – because the account was closed). As a rule, I now always keep at least $1 in any account which I wish to remain open.

  9. A bank closing an account with $0 balance is different than due to inactivity (e.g. they close your $100 account because you haven’t made any transactions in a month). Plus, it didn’t sound like they actually closed the account, they just made it inactive. Yes, 5 days is a little short, but if it was a month, that would be perfectly reasonable.

  10. Saying that Capital One is instituting this “new” policy to get rid of clients is misleading. The practice of closing an account at zero balance is neither new nor malicious.

    I do not work in retail banking anymore, but I did for a decade, and I have worked for both large and small local banks in different states. Automatically closing an account at zero balance was the standard procedure at every brick-and-mortar institution I’ve ever worked or banked, and this has been an industry standard for years (probably decades, but I can’t vouch for pre-1990s). When a client asked “How do I close my account?,” the answer was always, “Simply bring your account balance to zero, and it will be closed at the end of the business day.”

    A typical exchange when I opened an account for a client in those days went like this: “So, this is a free account, right? I don’t have to keep any minimum balance, right?” “That’s correct, Ms. Client, the account is free and you can keep as little as a penny in it. As long as you keep it above zero, you’re fine.” Of course, some clients didn’t know or forgot about this procedure, and if they accidentally got to a zero balance, it wasn’t a big deal to reactivate their account within 30-60 days by making a new deposit. This was never a malicious practice; withdrawing all of your money was simply part of the process of closing your account.

    Only when online banks like ING began offering accounts that could carry a zero balance did some consumers begin to expect that their account would stay open with no money in it. Years ago, most bank customers knew it didn’t work this way (because they had to close an account at some point in their lives and remembered that they did so by withdrawing all of their money).

    Additionally, as Eric mentioned above, the title of this post is misleading, because having an “inactive” account doesn’t really have anything to do with your balance. You could have a hundred thousand dollars in the account and it will become inactive, and later escalated to dormant, if you never make any transactions. And banks don’t just “drop” dormant accounts either, they handle them according to strict regulations that require the money to be turned over to the state after a prolonged dormancy (typically 5 years).

  11. Ironically I found this page because I was trying to close one of my capital one online accounts, and after being at $0.00 for several months (if not years) it was still open.
    More importantly the feature to closethe account is not availble online. It took me about 15 minutes talking to several phone retards to even close the account. (the first guy couldnt do it for some reason). The second person tried to sell me some 360 acct bs at a lower interest then I was already getting.
    The worst part is the games these f*ckers play. Instead of just having one do all account, savings\checking\money market, they keep coming up with new account names, and changing the interest on them every few months. If you dont pay attentions to their products and interests, you get raped (by not getting the max interest).
    Of course all the other ways these banks screw you, its no wonder they play these games!

  12. CapitalOne has closed my checking account and they refuse to explain why. I did not have a zero balance nor was there any activity that could have been construed to be fraudulent. Has anybody had a similar experience?

    • Yes- Jeff, I am going through that right now I am so confused. They will not give me any information and I do not understand why. It is my account! Shouldn’t I have the right to know why my account has been closed? Totally confused, I still have a balance of 400 sum odd dollars I owe and they say in order to pay it I must mail in a payment?????

  13. With all the criticism, I like the heads up and the title is accurate.

    Thanks, jonathan

  14. Do you, Jonathan or guests know a consumer friendly account that still exists?

    • If you want a checking account that is very tolerant of inactivity, I recommend a military-affiliated credit union like NavyFed, PenFed, etc. I can only guess that are so flexible because they have members that may be deployed for a very long time without banking activity. Or maybe they are just nicer in general.

      In practical terms, I often leave $10 or $5 in an account that I don’t use much to avoid complete closure. Capital One 360 bank will close your savings with $0, but not $5, in my experience.

      • I forgot about this blog entry until I was alerted of the new comment today. I often leave $1 balances at multiple Capital One 360 accounts. One of them hasn’t had activity for more than a year, and Capital One has a note next to it asking me to add money to it to reactivate that account, with no threat to get rid of it. Your post also mentioned Emigrant Direct – I’ve had $1.10 in there for years, in case they ever raise rates again. I think the magic number for most online banks may be closer to $1.

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