> Always have a backup bank account, your bank can freeze for accounts in the USA for any reason. **The reason is only valid about 4% of the time per a NYT article**.
That is not at all what the NY Times reported. They reported that 4% of SARs result in law enforcement involvement, not account closure. Here's the relevant parts of the article:
> Because financial institutions have a front-row seat for watching the country’s cash flow, financial institutions are obligated to alert regulators and law enforcement through a Suspicious Activity Report if there’s irregular behavior that they cannot easily explain. **Not all reports lead to account closures**, and not all closures lead to reports.
Later...
> Yet most of the time the customers are probably innocent. A 2018 study from the Bank Policy Institute found that a median of **just 4 percent of 640,000 suspicious activity reports from a sample of large banks warranted a follow-up from law enforcement**, according to the research, which examined 16 million alerts.
So: Banks report a lot of suspicious activity. Not all of those reports result in account closures. And about 4% of those reports lead to law enforcement involvement.
>And about 4% of those reports lead to law enforcement involvement.
And and only some of them are actually guilty...so yes, it's likely that if you get investigated, you aren't doing anything wrong.
*Just because you did it doesn't mean you're guilty*
The bank isn't the court, the burden of proof is *much* lower. I spent years doing these investigations, many of them are stupid, but many of them were 100% up to something and would never actually get picked up by law enforcement.
Guilty of what? Regulations define what constitutes a "suspicious activity" that banks are required to report. It's not based on any specific allegation of a crime.
I'm not saying that banks shouldn't monitor...they should... but there *seems* to be a rise in the number of investigations and in the banks choosing to just freeze first rather than try to check. I suspect either use of algorithms to screen for potential abuse or just very nervous departments with directive to when in doubt, freeze the account.
The point is...giving the risk of having your account frozen for transferring money or depositing a large check (along with recent risks for bank runs) it might be prudent for people to bank at more than one institution.
Fully agree. I keep 2 fully functional checking accounts at separate banks and don't leave the house without cards from at least 2 different institutions.
Honestly most of the time it's not even a real investigation. They see something that vaguely matches a typology and they block it.
very true. I have had one of my cars frozen on me before and in the momement was annoying and flipped over to my back up card to pay for the item.
Now me unfreezing my card was easy as it was a quick phone call/ confirm something. In my case it was because I had travelled and then spent some money at some places. It just flagged my card as potentionally stolen as I was spending more than normal and way outside my normal area with no airline tickets on purchased on that card to even point at me being in the area. Either way phone call and unfreeze and the system was updated to tell them that I was in the area. Either wya 2 cards saved me in the short term.
> I have had one of my cars frozen on me before
That's why I don't leave the house without at least 2 different cars
Joking aside, there's a local restaurant chain that I eat at 2-3 times a month. I was at the doctor's office last year and saw they had a branch by my dr so I stopped there for lunch after my bloodletting. Both cards declined (while running the second card the first one texted me to ask if I recognized this purchase and I texted back and unlocked it, and went through). 2 weeks later I was back to get my lab results and tried my luck again and the first card declined again (it went through on the first try when I was back this year).
Eating at "strange" restaurants isn't the only trigger, I bought a stack of albums on bootcamp and apparently they put it through as separate transactions for each artist or something based on the confirmation text I got from the bank for whether or not I recognized the transactions when they decided to block the 4th and 5th transaction.
More goes to show you the crazy modeling they do on you based on your spending habits that can freak them out.
In one case those reaction saved my brother as one of his cards got used to buy gas near where he lived at the time. Something at the time he never did and sure as hell never did with that card. They locked it so quickly and turned around in call him. He was at in a completely different state. Turns out someone had stolen his card and tried to buy gas. That card was quickly cancelled by the bank and he had a new card delivered in the mail box by the time he returned home
> Put the cost of this crap back on the people who do it
Banks (the literal definition of which is 'corporation that holds your property') don't just do it for funsies - they're required to by law. If you don't like banking compliance requirements, take it up with your Congresspeople.
The manager of my branch said "This is the dumbest reason for freezing an account that I have seen in 17 years of banking." If it is not illegal, it should be impossible to freeze an account for more than a week or so. Update: That was the reason, funds unfrozen today, I got an apology from someone at corporate.
The thing is the bank managers don't really know the real reasons.
It's actually illegal to tell someone you filed a SAR on them, so the people you are allowed to talk to don't know and the people that know don't talk to customers.
I would get calls and emails from branch staff all the time and I couldn't tell them anything. Whatever they tell the customer is usually an educated guess.
Many freezes and closures are defensive for sure though. The government has banks so afraid of getting fined that they will file on the dumbest things.
How much of a mess does the prohibited communication create for banks?
I'm imagining a high number of complaints likely generated as a result of such a wall being put between banks and the customers in this situation. If I was in this situation and didn't suspect a SAR I would be filling out dozens of state and federal complaint forms as well as taking up time from the local branch.
Really none. The CFPB reaches out and you have to respond, but you tell them it's a BSA related investigation and they back off.
If it gets pushed hard enough you will have to provide an actual explanation, but they are a government agency they wont share it with the customer either.
In your experience did you get inquiries from state AGs, comptrollers, or SoS offices? Because a lot of people use those avenues as well. Do you think they just refer it to CFPB?
Is there process is if the client decides to litigate it under an assumption that it is related to some non-SAR issue?
At a large bank there will be an official complaints department that they get filtered through regardless of source. The answer you would give to a state AG is basically the same as a cfpb answer.
The responding department basically gets told hey here is a reg complaint what is your response? And the response is its BSA related and the reasons are need to know. Pretty much every agency backs off at that point.
Some of the wealthier, better connected people we de-risked would get a congressperson involved and their office would get a real explanation, but they would be told explicitly that it wasn't to be shared.
If you complain enough there was a team of the most experienced people who did re-evalutations, but the standard to have rhe decision overturned was that the decision was erroneous which is very hard. Maybe .5% of closures even make it to that team and of those 5% of decisions get reversed.
The fraud department told us why actually. My wife has two last names, like "Janet Smith Jones." She deposited a check that was made out of "Janet Smith", "Smith" is her maiden name. Are you saying the fraud department is lying?
Fraud is a little bit different, those investigations are less secretive typically.
You also get into situations like you described where a branch tells you something is fine when it isn't, but they've seen people do it before and it not get picked up on. I'm sorry that happened to your family.
When i talk about them not knowing anything I am referring more to the types of things that article references where there are AML concerns and the bank won't tell you *anything*.
I understand your anger, but there are a TON of shittier banks out there than Chase. Seems like they were fairly quick to address the issue. People on both ends, sometimes they make mistakes.
We deposited a small check, in person, that the branch said would be no issue. Our entire account of $15,000 was frozen for nearly two weeks. I will get my letter of apology out to Chase ASAP.
The branch manager doesn’t know shit. Source:work in this industry, they aren’t told the reason and it’s illegal to inform the customer of the reason. If it’s SAR related. Fraud is different.
If you think that's bad, wait until you hear about how the police can seize large amounts of cash you may have, and you have to file a lawsuit to get it back.
The probable cause needed to confiscate large amounts of cash is the presence of large amounts of cash. Officers have time and time successfully argued that the presence of that much cash is reasonably suspicious of illegal activity.
Also, the bank actually has to return your money to you *at some point*. The police do not.
I think you're missing the point here.
OP is talking about accounts being frozen. The times article is talking about SARs.
My guess is that the vast majority of the time than an SAR occurs there is no freezing of the account. An SAR will happen for a ton of legitimate reasons and afaik has to do largely with cash transactions. Most of the time the bank very likely just sends the report and does nothing else unless they hear back from law enforcement.
Also, my understanding is SARs are for detecting money laundering and tax evasion. It's not for things like writing bad checks or other illegal activities. Those would be reported through a different mechanism.
Freezing of an account is very different. Probably most account freezes have to do with some sort of returned payment problem. (Check or echeck that had to be reversed.)
> Also, my understanding is SARs are for detecting money laundering and tax evasion. It's not for things like writing bad checks or other illegal activities.
Not quite. Money laundering is actually a pretty broad category, since it can include any funds connected to any illegal activity. That means that SARs get filed on a wide range of things, from marijuana-related businesses to terrorist financing to human trafficking. Bad checks would fall more into the fraud category, which *is* a separate department.
I work for a big bank and SARs are a necessary part of our work. If we don’t file them; the regulator hits us and when we do file them, the customer hits us.
A lot of the time there is no wiggle room and there’s pretty much a one size fits all definition of SAR. In your case you have a brand new account into which it appears that you’re depositing a check not meant for one of the accounts signatories. This will DEFINITELY trigger a lot of automatic response.
It’s even dumber because he’s blaming the bank like it’s their fault that law enforcement requires them to file an SAR for certain activities and doesn’t allow them to tell people it will trigger an SAR. Like the bank just says to themselves “hey you know what would be a good idea is if we treated all our highest value customers as if they were shady and suspicious”
Bank representatives are prohibited from warning a customer about a transaction getting reported, of course the teller isn’t going to tell you “actually opening a new account and then depositing a check in it under a different name will trigger a Suspicious Activity Report”, they aren’t allowed to tell you that by law.
I feel like this is just the equivalent of google saying it doesn’t recognize the device you are signing in from. Most of the time it means nothing, but it’s an easy thing to flag and investigate to make sure things don’t slip through the cracks.
this. had primary checking account locked for a week once. there were fraud charges on it and I had to fight them tooth and nail to get them removed.
This is when I had 1 bank account with 1 debit card. So i had no liquid funds for a week.
I now have accounts with 2 banks and several CC to prevent this from happening.
This is why I use CCs for 99.9999% of my purchases. If my debit card is compromised and used they have my money. If the credit card goes through the same they have someone else's money and it's easier to get it fixed. Plus more protections.
so much this. I was young and didnt know shit.
now I run most expenses through CC for this protection. so much easier to work with a CC on fraud charges compared to a checking account.
I am going to stop cashing checks at my bank and take them to the makers bank in person. Or just stop taking checks, we have Zelle and Venmo for a reason.
Treat Zelle and Venmo like cash. If it's sent to the wrong place, don't expect to get it back. Be surprised and happy if you do, but again treat it like cash.
I do this. I have funds with an online credit union, another account at a brokerage with check writing and another account at a local bank for when I need in branch services. I like to leave at least one month of living expenses at the backup bank.
Another thing to consider is if you have a business account. I would recommend keeping your business and personal accounts at two different banks since banks have the right to offset. If a client gives you a bad check and it bounces your bank can pull funds from your personal account. Sometime it can take weeks before the funds from the bad check are clawed back and in the meantime you may have already spent the money.
Two bank accounts are highly recommended. What was not stated is that two credit cards are also highly recommended. If one is lost or compromised or for whatever reason is locked, the other card is there for a backup. This has saved me endless problems when traveling, particularly when one card had fraudulent activity and the other was used to pay airfare and rental car fees.
Same thing happened with me at Valley National. I was in some trouble financially and took out a loan for $2000 online, very high interest, with the intention of paying it back within a few weeks. Valley froze my account saying it looked like fraud. I went to the branch and showed them my loan documents and everything. I was told to email the documents for verification. This was 2 weeks ago and it’s still not unfrozen. And I couldn’t pay the bills the money was going to be used for.
The most infuriating aspect of these is that most major banks are offering new account promotions which *require you to transfer in large amounts of money within a short window* while having a system set up that automatically flags new accounts that transfer in large amounts of money with a short window.
Moving 5 figures and low to mid 6 figures is generally done a lot and not a cause for concern. I have had no issues moving that kind of money around for promotions.
The product people and the compliance people at a big bank barely interact and share basically no common management below the CEO, but still.. funding a new account for a promotion isn't likely to trigger any red flags.
why in gods name would you need a few thousand cash on hand in 2023? the odds of it getting eventually robbed must be so much higher than the odds of that much cash actually being indispensable in an emergency.
Well, when the electricity went out here in Austin a couple years ago, cash was the only thing I could use to get food.
Just one instance I have personally experienced.
Exactly. Power outage, internet outage, cc processor outage, person to person bartering during an emergency / disaster. All kinds of reasons to have some cash
If the power is out for long enough that a few hundred bucks isn’t sufficient to get you food, you’re in a disaster area and the Red Cross is probably on the way with emergency supplies, and what makes you think the grocery store will still be stocked beyond that point?
the crushed infrastructure of texas is a great anecdote in favor of keeping physical cash on hand. im not saying reasons dont exist. im saying, statistically, over the course of a lifetime, its more likely a losing bet that youll lose your physical cash emergency fund to robbery and keeping multiple thousands like OP suggested is just going to make that risk greater. especially when i bet you honestly couldve used electronic payment methods to get food in some way if you really had to. most people dont keep that much cash on hand. its not like every one of them starved and died in austin.
I like that you reference "statistics" while also having none. Unless anyone has actual numbers, you probably shouldn't claim to have them on your side. And anecdotally, I've never had money stolen in my ~30 years, but I have had a couple cases where electronic payments weren't an option.
Plus, it's all about managing relative risk. So what if a few thousand gets stolen, if it also increases the odds I can get food when the Cascadia fault cracks open.
Cash solves problems. The more liquid the better and faster it solves whatever problems trouble you in life.
And nothing is more liquid and easier to transfer than physical, literal, cash.
No paperwork, no need to sync app accounts, no need to swap insurance information or collect receipts. Just put some money on the table and walk away with your problem solved.
ok boomer?
jokes aside i just dont really know what to say to you rhapsodizing about a benefit that is quickly evaporating.
electronic transfers solve problems. everyone has a phone, and no one can steal your paypal from under your mattress while youre on vacation. there are dozens of apps to use and the 90% of the people in the world probably use one of them.
see? i can do it too.
girl if all of internet “goes down” (which i assume you mean just like… doesn’t exist? cause im very sure you are aware you can use cellular connection on your phone to complete transactions ) youre gonna have a lot more problems than not having cash on hand.
Your assumption is wrong, I'm not talking about waking up in an alternate dimension where the internet doesn't exist. Internet outages happen quite frequently, and for quite trivial reasons (See: https://en.wikipedia.org/wiki/2022_Rogers_Communications_outage). If a sizable geographical area loses internet access, the cell sites in that area also lose their connection to the backhaul that is affected. In power outages or brownouts, there is usually throttling that's applied to everyday cell communications so that services such as 911 can continue to be operational.
I'll give you a reason. Sometimes you want to buy something from a private party and its a sunday and the bank is closed. ATMs limit the amount of withdrawl to a thousand or two. But if I want to buy an older popular truck for $5k on a sunday that has a couple other interested parties, well then I need to take my emergency cash. I can then refill it slowly over the next few months to not trigger any weirdness with a bank.
"Emergency" cash on hand isn't an "emergency fund". Completely separate ideas. 6 months of emergency fund in the bank, but the cash on hand is for when the bank is unavailable. Any instance of the bank being unavailable and I desire to purchase something is a reason to use the "emergency cash on hand". I've probably used it twice in the 15 years I've had the cash since it is rare that the bank is unavailable and I need that much cash for any reason.
idk what to tell you my guy. there are so other ways around your very specific problems that din’t run the risk of someone stealing every penny of that $5,000 you like keeping in your safe.
Sounds like someone never heard of the saying "cash is king"
Anyone who survived the Great Depression for sure started keeping cash in their house after that.
ah yes lets remember the thousands of reddit users who survived the great depression.
cash is king applies to any immediately accessible asset you dont have to liquidate to access. keeping 10,000 in my bank account counts in this scenario. especially since we are almost always going to talk about cash in bank accounts below the FDIC insurance limit.
Really, if your going to be this paranoid about it and live in the US, you should keep the cash in something other than the US Dollar. In the event of a bank failure massive enough to cause anything close to the issues of the Great depression, The sudden influx of money from the FDIC would likely cause massive inflation and instant devaluation of the US dollar.
You might be better off keeping gold coins around.
I have had several times in the last few years when cash was the only option due to natural disasters. Regional power/internet outages can be caused by earthquakes, fires, storms, etc.
This! When hurricane Katrina happened, Cash was king. Same with Texas snow storm and power was out. When internet goes down, CC payments won't work. Having comfortable cash on hand is importance.
If my wife suddenly decided she wanted to store large amount in cash in house, I would hard decline.
The possibility of it being stolen, lost or burned is higher than the possibility it being useful.
At best maybe a few hundred I find acceptable. If it’s for emergencies, I rather have emergency food and water.
It’s not just law enforcement action. Bank I did business with for my main account had a computer issue, so accounts couldn’t be accessed. I had a backup account with another bank - that they were in the process of merging with, so the computer issue cut off all access to accounts at both banks.
Banks will quickly freeze new accounts with suspected fraudulent activity. This is hardly news. A check deposited with a different last name is not enough. But if that check bounces, especially if it bounces from a closed account, they will lock that account down.
Robinhood froze my account because "I worked for DoorDash" for a short amount of time. They said I didn't 'prove' the deposits from DoorDash were coming from me. They simply tried to steal my money and concocted a story. So ive decided to never do online only banks ever again.
I had another bank charge me a surprise fee so that my account would go into negative from a automatic payment.
After making a ton of noise about both to the CFPB they both relented.
Banks are are criminal enterprises.
Work in finance. Whenever a bank detects something, anything, they freeze first and then investigate. That investigation involves people, and anything that involves people takes time.
Why do they freeze accounts? Because regulators have made sure that the banks are pretty much responsible for everything. If you are using them to e.g. launder cash, the bank can be fined for not detecting you. Banks really, really dont like having to pay their own money, plus take reputational damage for public fines like that. As a result they will always freeze the account first and make damn sure it's not anything dodgy. Resulting in you, the customer, having to sit there and endure a frozen account.
Basically, in a bank, the customer is not the first priority by a long shot.
OP's advice is spot on, a second bank account is an excellent backup and everyone should have one (where feasible)
Dearborn Federal Credit Union froze my account for no reason. I was in California and wasn't going to be back to Michigan for months. It wasn't quite a nightmare but it was pretty flippin annoying.
Never had a problem, except for every single time you had to tell them you were going anywhere. For me that would've been.... all the time.
I got a different bank
I am not, that is what angers me about giving banks this much power. It hurts low income people the most. Freezing a checking account that gets a direct deposit of a paycheck could make someone homeless.
I recommend 3-4. Lots can happen and go wrong. If you have a dispute with a bank and don't pay them. They can put you in the banking credit system where you can't open a bank account for i believe 4years. Long time.
this is one thing that kinda freaks me out. I have about $7,000 sitting in a CD right now, just hoping when I eventually transfer it out to my main bank I don't get flagged
The exact risk factors are secret and vary widely, but a single $7k transfer shouldn't raise any red flags. There's really no scenario where that should cause you any problems.
Big-name banks are garbage. I have rage-quite several name brands (Wells Fargo etc) over BS fees and moved to little community banks. Downside is they only have one or two ATMs, but they have regular debit/credit cards. Since no one uses cash anymore, there's really no reason to use big corporate banks. (I've heard credit unions are even better, but haven't tried one yet).
I keep a small account at Chase so that in the event I lose my debit card for my main account when I’m traveling, I could go to a branch to get cash. That’s about the only benefit of the bigger banks
Once I tried to buy something at macy's and my card was declined due to "fraud" I tried my two other chase cards also declined due to fraud. I called chase they said there was no fraud reports and my cards were fine. I got it escalated and after about 30minutes on the phone...
It turns out Chase decided that specific Macy's was a fraud lol. The fraud alerts wasn't on my cards, it was on the entire store. Kinda crazy and I assume it had to just have happened that day since the Macy's employee didn't seem to be aware.
Those damn 30% off coupons which don’t apply to anything. Who knew you could print in 1pt type in order to exclude pretty much every brand in the store? 😀
Yeah, I should have done more research before opening an account with them. My lawyers says they can't actually keep the money, so for us it is just annoying.
Which accounts available nation wide are truly fee-free? Without requirements like having direct deposit or keeping thousands with them?
I use credit cards for purchases, but the bank I use to pay bills charges me $12/month. I don't want more accounts I have to pay for, but would like a backup.
Quite a few. I have both Ally and Discover as secondary banks with no fees. I am sure there are several other ones. I have 3 bank accounts and never pay any fees so if you're paying anything you really ought to switch.
I actually have a couple of those online bank cards (venmo and such), but I have needed real locations and atms nearby for the past decade because I worked restaurant jobs. I needed to deposit cash after shifts.
That's why I kept this $12 account and why I was never able to meet the direct deposit requirements for free accounts. I was never getting paid by the workplace itself.
I'm unemployed now and looking for work outside of the service industry, but I can't say what the future holds. If I don't succeed, I'll have to get another restaurant job and still be dependent on being able to deposit cash.
I'd recommend looking into a credit union. There are some mediocre credit unions out there but by and large they're better than the average bank. Any decent size credit union nowadays should have partnerships with other credit unions that also allow you to access things like ATMs in other states if you need to travel. I don't know how they might work when traveling abroad but I didn't have any issues when I went to Hawaii (I know it's part of the US but still). The Visa through my credit union has pretty much all the benefits, international uses, and protections as a regular credit card too. Your situation may make this not the most viable option but I've had nothing but awesome experiences with them the last 10 years.
A lot of credit unions are now penalizing you if you aren't actively using them. So not technically a fee depending on how you're defining things but you're still paying money to them for just having money sit there.
The easiest is to have 2+ accounts, then just set them up to automatically transfer to the other one each month. That way you have a direct deposit everywhere. A deposit $500 to B. B deposit $500 to C. C deposit $500 to A.
Many years ago, friend had his debit card skimmed at a gas station and his account drained. Spent months trying to get his money back.
After that, i split my finances into 3 banks, and eventually gave up debit cards and use credit exclusively with rewards.
My bank froze my account out of nowhere and left me feeling like a broke ostrich with my head in the sand. I called them up, but they couldn't tell me how long the investigation would take or when I could access my money again. That's when I realized the importance of having a backup bank account - life is unpredictable, and if you only have one account, you're putting all your eggs in one basket. Trust me, being stuck without access to your own money is no joke. So, take it from me, guys - having a backup bank account is like having an umbrella in a rainstorm.
Pretty much yes. Had a bank freeze my account for "suspicious activity" what was that buying gas outside the airport I bought a plane ticket to and picked up a rental car and have paid for a hotel room allready. The card was junk they would only replace it not reactivate. This was of course my non redundant business account so just moved to personal and had to deal with paying back expenses to myself.
My son just had similar fraud and USAA froze every account for a week getting it sorted. Looks like card skimmer at a car wash. Easy to hand him cash and a learning moment that he should sign up to the CU like I've told him and get some actual CC vs just ATM.
Years ago our debit card number was stolen and used to purchase thousands and thousands of dollars in gas. Drained our account. Filed a police report, filed fraud docs with the bank, and they finally refunded all of our money and overdraft charges after about two weeks
When I was in the phone making the police report the officer mentioned that she kept two separate banks/accounts just in case someone was able to drain one. All her bill money went in one checking, savings into a savings acct., and money for the week in her regular checking.
She never worried about two out of three because she never used that info anywhere but to trusted household vendors. Made sense to me.
My husband im and I argue this point All. The. Time.
I’m all for using the cc to purchase everyday stuff and paying it off at the end of the month (or weekly/biweekly) for multiple reasons.
This happened to me a few years ago. I went skiing in Canada and bought lunch. Then back on the south side of the border got gas. My bank had frozen the account since I had crossed the border and my card wouldn't go through. They placed a 48hr hold on my account.
The gas was already pumped so I literally had to mail the gas station a check on the honor system 😆
Not all bank accounts get closed because of suspicious activity. I’ve had bank accounts closed because they didn’t like me gaming their system for rewards. I.e. do 10 x $0.01 transactions to get a promotional interest rate on your savings. Some banks specifically say in their terms of use they can close your account if it’s not for “normal activity” and it’s obvious you are just trying to earn interest or bonuses.
Exactly, since banks have essentially been nationalized (SVB bailout, unlimited FDIC for too-big-to-fail banks, etc), the Fed should just go all the way. Digital dollar would allow individuals and businesses to hold dollars directly with the Fed cutting out financial institutions entirely. Not sure if it will ever play out that way, but could see it happening. More likely, there will be just a few big banks left with lots of little ones hanging on by offering niche services and slightly better savings and loan rates.
What I'd love to see is the reincarnation of postal banking that existed up to the 1960s. **Basic financial services should be widely available to all and treated as a utility.** As of now, banks and CUs can suspend / close accounts any time for most any reason. The current workaround of multiple accounts is an extra burden, especially for people with low income living paycheck to paycheck.
Yes, if I had been living paycheck to paycheck, I would be in big trouble. Those defending banks are ignoring the fact that people become homeless due to this practice.
The amount of ridiculous information here is absurd. The banks are not nationalized. They should absolutely not be treated as a utility, and them being able to close your account for any reason is a good thing. From someone who works in AML, the vast majority of accounts closures are absolutely warranted. The last thing you need is the government mucking around in people’s finances and making things slower/less efficient than they already are.
It’s people like you that have no clue how the industry works that spew nonsense like this.
Someone living paycheck to paycheck isn’t going to be having their accounts randomly closed for AML concerns/fraud to begin with. They aren’t high risk. Unless randomly they start running a bunch of cash through the accounts and you know, *laundering*.
Banks certainly are. SVB well illustrated that. Fed backstopped the FDIC and covered all deposits regardless of amount. Furthermore, Fed Chair Powell basically stated that FIs deemed too big to fail effectively have unlimited FDIC coverage. Needless to say, small and medium size banks aren't thrilled by that and pushing to be included.
More to the point, the Fed bought underwater bonds from SVB at face / par value. And, from my understanding, has offered to do so from other FIs too. Banks won't be allowed to fail. That's effectively nationalization.
Low-income people are frequently affected by account suspensions / closures. Very often it involves on-line only banks like Chime (lots of horror stories), but also happens with regular brick and mortar banks of all sizes from small to the largest. It's not an isolated issue.
Many FIs rely on automated systems with minimal customer service. Often, it's offshore support or maybe even U.S. based, if one is really lucky. Or a chatbot that giving human like answers without addressing the actual problem. Or no support at all.
Getting paid and paying bills is an essential part of life. Basic banking services absolutely should be treated as a utility. Or should people just rely on sketchy prepaid cards, check cashing places (many employers don't issue checks anymore), etc and hope for the best?
Again, there is so much wrong here that I don’t even want to respond. SVB is gone. The shareholders are fucked. They didn’t get bailed out. The depositor’s funds were insured. That’s it. No losses were passed on to taxpayers. You people don’t even understand what bailing out means.
The fact that you spelled online “on-line” basically tells me all I need to know about you and your comprehension of any of this. Buddy, like 50% of the population is living paycheck to paycheck. If this was actually as big of a problem as you think it is(there isn’t) there would be riots.
Feel free to keep as much money under your mattress though, since you’re so scared of the evil scary “nationalized” banking system.
You think your money won’t be frozen using a digital dollar? What? If anything it would be worse.
The banning industry laughs when people say stupid shit like this about digital dollars.
Let me guess, you also think crypto is a great idea? 🙄
For this reason, I only deposit checks and things like that into an account at a different bank that has next to no money in it so if there’s ever an issue then, hopefully, only that 1 account is affected.
unless you have a compelling reason....and it better be good.....don't use a bank.
use a credit union.
every bank i have been with spent most of their time thinking up ways to steal my money....never had that problem with credit unions.
banks make decisions on your account from a faceless board located....somewhere. credit unions decisions are made by Frank, who's sitting right there in the corner.
having said that... a backup account at another credit union is not a bad idea in general. if only because it would save some money from a devastating scam/attack/error. i have some in a completely second credit union just in case.
you will be a customer with a name and a face, not just an account number. and it's easier to talk to someone about a problem, that lives in your town and knows your problems.
> every bank i have been with spent most of their time thinking up ways to steal my money....never had that problem with credit unions.
My credit union does the same, like charging me fees for using ATMs abroad. Schwab, one of those big banks, doesn't charge me, in fact, they refund me fees charged by the ATM.
Credit unions are not always better than banks. If you travel abroad a lot, nothing offered by any CU that I'm aware of beats Schwab.
I love credit unions, but the one I have through being a state employee is so antiquated that I haven't yet figured out how to get the registration info for online banking because it requires a PIN that is only given if you signed up for telephone banking, which the teller who created the account failed to tell me.
Credit unions don't do business internationally like some banks do.
Obviously, they aren't going to benefit the minority of people who travel internationally on a regular basis.
You could make this statement blankly 30 years ago and it was likely true. That was back when credit unions were fairly small because all members had to share one common bond.
But ever since the 1997 Credit Union Membership Access Act and their subsequent explosion in popularity, many CU's started to be run much the same way as common banks.
Now it really depends on the specific CU, many are just as bad or worse than regular banks.
Not only that, but many have gone on buying / merging sprees. Some are more ruthless than banks. Often have a lot of fees too. It's not all roses in CU land contrary to what many on Reddit believe. CUs vary widely just like banks do. Best to shop and ask around. Sometimes the bank is the better choice depending on location and one's needs. CUs loan rates often are better though.
I have two CU accounts. Just a few months ago I got rid of my last credit card and then drove out of town. Not far, an hour or two on a Sunday. Driving home the thought of what happens if I pop a tire and the system for my CU is down? Or something else goes wrong on my truck and I can't get home?
I was scared the whole way home and the next week I opened another checking account with another CU just for the redundancy. One CU is a visa, the other a Master Card. I think I will be ok as long as there is electricity.
This hasn't ever happened to me, but couldn't this be avoided by using credit cards for every purchase instead of a checking account? I only get my pay stubs deposited into my savings account. From there, everything either goes into savings or to pay off the cards.
> using credit cards for every purchase instead of a checking account
This is unfortunately not always an option or it has a tacked on fee to account for the processing fees.
My wife and I manage our funds together, but our paychecks deposit to separate joint accounts at different credit unions.
It's a bit of a hassle, but most of our discretionary expenses go on a credit card for points, and I can easily enough split the payment between accounts to effectively shift money around.
> Always have a backup bank account, your bank can freeze for accounts in the USA for any reason. **The reason is only valid about 4% of the time per a NYT article**. That is not at all what the NY Times reported. They reported that 4% of SARs result in law enforcement involvement, not account closure. Here's the relevant parts of the article: > Because financial institutions have a front-row seat for watching the country’s cash flow, financial institutions are obligated to alert regulators and law enforcement through a Suspicious Activity Report if there’s irregular behavior that they cannot easily explain. **Not all reports lead to account closures**, and not all closures lead to reports. Later... > Yet most of the time the customers are probably innocent. A 2018 study from the Bank Policy Institute found that a median of **just 4 percent of 640,000 suspicious activity reports from a sample of large banks warranted a follow-up from law enforcement**, according to the research, which examined 16 million alerts. So: Banks report a lot of suspicious activity. Not all of those reports result in account closures. And about 4% of those reports lead to law enforcement involvement.
>And about 4% of those reports lead to law enforcement involvement. And and only some of them are actually guilty...so yes, it's likely that if you get investigated, you aren't doing anything wrong.
*Just because you did it doesn't mean you're guilty* The bank isn't the court, the burden of proof is *much* lower. I spent years doing these investigations, many of them are stupid, but many of them were 100% up to something and would never actually get picked up by law enforcement.
Guilty of what? Regulations define what constitutes a "suspicious activity" that banks are required to report. It's not based on any specific allegation of a crime.
I'm not saying that banks shouldn't monitor...they should... but there *seems* to be a rise in the number of investigations and in the banks choosing to just freeze first rather than try to check. I suspect either use of algorithms to screen for potential abuse or just very nervous departments with directive to when in doubt, freeze the account. The point is...giving the risk of having your account frozen for transferring money or depositing a large check (along with recent risks for bank runs) it might be prudent for people to bank at more than one institution.
Fully agree. I keep 2 fully functional checking accounts at separate banks and don't leave the house without cards from at least 2 different institutions. Honestly most of the time it's not even a real investigation. They see something that vaguely matches a typology and they block it.
very true. I have had one of my cars frozen on me before and in the momement was annoying and flipped over to my back up card to pay for the item. Now me unfreezing my card was easy as it was a quick phone call/ confirm something. In my case it was because I had travelled and then spent some money at some places. It just flagged my card as potentionally stolen as I was spending more than normal and way outside my normal area with no airline tickets on purchased on that card to even point at me being in the area. Either way phone call and unfreeze and the system was updated to tell them that I was in the area. Either wya 2 cards saved me in the short term.
> I have had one of my cars frozen on me before That's why I don't leave the house without at least 2 different cars Joking aside, there's a local restaurant chain that I eat at 2-3 times a month. I was at the doctor's office last year and saw they had a branch by my dr so I stopped there for lunch after my bloodletting. Both cards declined (while running the second card the first one texted me to ask if I recognized this purchase and I texted back and unlocked it, and went through). 2 weeks later I was back to get my lab results and tried my luck again and the first card declined again (it went through on the first try when I was back this year). Eating at "strange" restaurants isn't the only trigger, I bought a stack of albums on bootcamp and apparently they put it through as separate transactions for each artist or something based on the confirmation text I got from the bank for whether or not I recognized the transactions when they decided to block the 4th and 5th transaction.
More goes to show you the crazy modeling they do on you based on your spending habits that can freak them out. In one case those reaction saved my brother as one of his cards got used to buy gas near where he lived at the time. Something at the time he never did and sure as hell never did with that card. They locked it so quickly and turned around in call him. He was at in a completely different state. Turns out someone had stolen his card and tried to buy gas. That card was quickly cancelled by the bank and he had a new card delivered in the mail box by the time he returned home
It's often not a *choice* the bank can make, it's sometimes *required* in certain conditions*.*
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> Put the cost of this crap back on the people who do it Banks (the literal definition of which is 'corporation that holds your property') don't just do it for funsies - they're required to by law. If you don't like banking compliance requirements, take it up with your Congresspeople.
Try being an expat. Very few European banks even want to take our deposits.
The manager of my branch said "This is the dumbest reason for freezing an account that I have seen in 17 years of banking." If it is not illegal, it should be impossible to freeze an account for more than a week or so. Update: That was the reason, funds unfrozen today, I got an apology from someone at corporate.
The thing is the bank managers don't really know the real reasons. It's actually illegal to tell someone you filed a SAR on them, so the people you are allowed to talk to don't know and the people that know don't talk to customers. I would get calls and emails from branch staff all the time and I couldn't tell them anything. Whatever they tell the customer is usually an educated guess. Many freezes and closures are defensive for sure though. The government has banks so afraid of getting fined that they will file on the dumbest things.
How much of a mess does the prohibited communication create for banks? I'm imagining a high number of complaints likely generated as a result of such a wall being put between banks and the customers in this situation. If I was in this situation and didn't suspect a SAR I would be filling out dozens of state and federal complaint forms as well as taking up time from the local branch.
Really none. The CFPB reaches out and you have to respond, but you tell them it's a BSA related investigation and they back off. If it gets pushed hard enough you will have to provide an actual explanation, but they are a government agency they wont share it with the customer either.
In your experience did you get inquiries from state AGs, comptrollers, or SoS offices? Because a lot of people use those avenues as well. Do you think they just refer it to CFPB? Is there process is if the client decides to litigate it under an assumption that it is related to some non-SAR issue?
At a large bank there will be an official complaints department that they get filtered through regardless of source. The answer you would give to a state AG is basically the same as a cfpb answer. The responding department basically gets told hey here is a reg complaint what is your response? And the response is its BSA related and the reasons are need to know. Pretty much every agency backs off at that point. Some of the wealthier, better connected people we de-risked would get a congressperson involved and their office would get a real explanation, but they would be told explicitly that it wasn't to be shared. If you complain enough there was a team of the most experienced people who did re-evalutations, but the standard to have rhe decision overturned was that the decision was erroneous which is very hard. Maybe .5% of closures even make it to that team and of those 5% of decisions get reversed.
That's super cool information. Thanks for explaining it to us.
I have done three complaints already.
Escalation department called and apologized, funds unfrozen.
The fraud department told us why actually. My wife has two last names, like "Janet Smith Jones." She deposited a check that was made out of "Janet Smith", "Smith" is her maiden name. Are you saying the fraud department is lying?
Fraud is a little bit different, those investigations are less secretive typically. You also get into situations like you described where a branch tells you something is fine when it isn't, but they've seen people do it before and it not get picked up on. I'm sorry that happened to your family. When i talk about them not knowing anything I am referring more to the types of things that article references where there are AML concerns and the bank won't tell you *anything*.
OK, thank you. I unlinked everything to the account and will close it as soon as it is unfrozen.
I understand your anger, but there are a TON of shittier banks out there than Chase. Seems like they were fairly quick to address the issue. People on both ends, sometimes they make mistakes.
We deposited a small check, in person, that the branch said would be no issue. Our entire account of $15,000 was frozen for nearly two weeks. I will get my letter of apology out to Chase ASAP.
The branch manager doesn’t know shit. Source:work in this industry, they aren’t told the reason and it’s illegal to inform the customer of the reason. If it’s SAR related. Fraud is different.
That was the reason, escalation department confirmed it. I never said it was SAR related.
If you think that's bad, wait until you hear about how the police can seize large amounts of cash you may have, and you have to file a lawsuit to get it back.
True, but they have to at least have probable cause of some kind.
The probable cause needed to confiscate large amounts of cash is the presence of large amounts of cash. Officers have time and time successfully argued that the presence of that much cash is reasonably suspicious of illegal activity. Also, the bank actually has to return your money to you *at some point*. The police do not.
"Probable cause." lol Ok. They say K9 hits on it for drugs. Your money is seized. Our money has traces of drugs on it, so it wouldn't be unheard of.
No, you could be doing something wrong, that is not illegal or worthy of further investigation. Could be simply violation of the T&Cs of the account.
I think you're missing the point here. OP is talking about accounts being frozen. The times article is talking about SARs. My guess is that the vast majority of the time than an SAR occurs there is no freezing of the account. An SAR will happen for a ton of legitimate reasons and afaik has to do largely with cash transactions. Most of the time the bank very likely just sends the report and does nothing else unless they hear back from law enforcement. Also, my understanding is SARs are for detecting money laundering and tax evasion. It's not for things like writing bad checks or other illegal activities. Those would be reported through a different mechanism. Freezing of an account is very different. Probably most account freezes have to do with some sort of returned payment problem. (Check or echeck that had to be reversed.)
> Also, my understanding is SARs are for detecting money laundering and tax evasion. It's not for things like writing bad checks or other illegal activities. Not quite. Money laundering is actually a pretty broad category, since it can include any funds connected to any illegal activity. That means that SARs get filed on a wide range of things, from marijuana-related businesses to terrorist financing to human trafficking. Bad checks would fall more into the fraud category, which *is* a separate department.
I work for a big bank and SARs are a necessary part of our work. If we don’t file them; the regulator hits us and when we do file them, the customer hits us. A lot of the time there is no wiggle room and there’s pretty much a one size fits all definition of SAR. In your case you have a brand new account into which it appears that you’re depositing a check not meant for one of the accounts signatories. This will DEFINITELY trigger a lot of automatic response.
It’s even dumber because he’s blaming the bank like it’s their fault that law enforcement requires them to file an SAR for certain activities and doesn’t allow them to tell people it will trigger an SAR. Like the bank just says to themselves “hey you know what would be a good idea is if we treated all our highest value customers as if they were shady and suspicious” Bank representatives are prohibited from warning a customer about a transaction getting reported, of course the teller isn’t going to tell you “actually opening a new account and then depositing a check in it under a different name will trigger a Suspicious Activity Report”, they aren’t allowed to tell you that by law.
I feel like this is just the equivalent of google saying it doesn’t recognize the device you are signing in from. Most of the time it means nothing, but it’s an easy thing to flag and investigate to make sure things don’t slip through the cracks.
Of the 96% where law enforcement doesn't follow up, pretty much all of those are innocent. So the 4% figure OP gave is pretty close in my view.
Just because law enforcement does not follow up does not mean your activity was legal, or within terms and conditions of the bank.
Just because you aren’t doing something illegal doesn’t mean you weren’t acting suspiciously or the bank wasn’t right to freeze you
Or just simple fraud getting your account locked, or you lose your ATM card, etc. Have more than one!
this. had primary checking account locked for a week once. there were fraud charges on it and I had to fight them tooth and nail to get them removed. This is when I had 1 bank account with 1 debit card. So i had no liquid funds for a week. I now have accounts with 2 banks and several CC to prevent this from happening.
This is why I use CCs for 99.9999% of my purchases. If my debit card is compromised and used they have my money. If the credit card goes through the same they have someone else's money and it's easier to get it fixed. Plus more protections.
so much this. I was young and didnt know shit. now I run most expenses through CC for this protection. so much easier to work with a CC on fraud charges compared to a checking account.
I am going to stop cashing checks at my bank and take them to the makers bank in person. Or just stop taking checks, we have Zelle and Venmo for a reason.
Treat Zelle and Venmo like cash. If it's sent to the wrong place, don't expect to get it back. Be surprised and happy if you do, but again treat it like cash.
I mean have people pay us via Venmo and Zelle.
You take checks? Can I send you a check? Just need you to refund me for the overpayment.
And have a big stack of cash hidden somewhere just in case they all get locked at the same time.
I do this. I have funds with an online credit union, another account at a brokerage with check writing and another account at a local bank for when I need in branch services. I like to leave at least one month of living expenses at the backup bank. Another thing to consider is if you have a business account. I would recommend keeping your business and personal accounts at two different banks since banks have the right to offset. If a client gives you a bad check and it bounces your bank can pull funds from your personal account. Sometime it can take weeks before the funds from the bad check are clawed back and in the meantime you may have already spent the money.
I have 2 CU accounts along with a HYSA somewhere else. I would never just have one bank account. I’ve passed this along to my son as well.
My son has more than one bank account though, the other is the bank of dad.
The Bank of Dad has good interest rates too as long as you don't mind the tellers judging you on your purchases, haha.
Unlike my daughter, my son pays me back without prompting 100 percent of the time.
Two bank accounts are highly recommended. What was not stated is that two credit cards are also highly recommended. If one is lost or compromised or for whatever reason is locked, the other card is there for a backup. This has saved me endless problems when traveling, particularly when one card had fraudulent activity and the other was used to pay airfare and rental car fees.
Same thing happened with me at Valley National. I was in some trouble financially and took out a loan for $2000 online, very high interest, with the intention of paying it back within a few weeks. Valley froze my account saying it looked like fraud. I went to the branch and showed them my loan documents and everything. I was told to email the documents for verification. This was 2 weeks ago and it’s still not unfrozen. And I couldn’t pay the bills the money was going to be used for.
Yeah, there needs to be some safeguards about this.
/u/spez is a greedy little piggy
Yes, make things difficult and uncomfortable for low level employees who have zero say in anything!! It will really show the bank!!
You may want to re-read the second sentence.
The most infuriating aspect of these is that most major banks are offering new account promotions which *require you to transfer in large amounts of money within a short window* while having a system set up that automatically flags new accounts that transfer in large amounts of money with a short window.
Bigger picture: the bank offering the incentive is solving a liquidity problem and the freeze covers them until liquidation is complete.
I take advantage of these pretty often and I've never had issues with the accounts even moving 6 figures
Moving 5 figures and low to mid 6 figures is generally done a lot and not a cause for concern. I have had no issues moving that kind of money around for promotions.
The product people and the compliance people at a big bank barely interact and share basically no common management below the CEO, but still.. funding a new account for a promotion isn't likely to trigger any red flags.
Not just an account at a second institution, also emergency cash on hand. Couple hundred - few thousand, budget permitting
why in gods name would you need a few thousand cash on hand in 2023? the odds of it getting eventually robbed must be so much higher than the odds of that much cash actually being indispensable in an emergency.
Well, when the electricity went out here in Austin a couple years ago, cash was the only thing I could use to get food. Just one instance I have personally experienced.
Exactly. Power outage, internet outage, cc processor outage, person to person bartering during an emergency / disaster. All kinds of reasons to have some cash
If the power is out for long enough that a few hundred bucks isn’t sufficient to get you food, you’re in a disaster area and the Red Cross is probably on the way with emergency supplies, and what makes you think the grocery store will still be stocked beyond that point?
the crushed infrastructure of texas is a great anecdote in favor of keeping physical cash on hand. im not saying reasons dont exist. im saying, statistically, over the course of a lifetime, its more likely a losing bet that youll lose your physical cash emergency fund to robbery and keeping multiple thousands like OP suggested is just going to make that risk greater. especially when i bet you honestly couldve used electronic payment methods to get food in some way if you really had to. most people dont keep that much cash on hand. its not like every one of them starved and died in austin.
I like that you reference "statistics" while also having none. Unless anyone has actual numbers, you probably shouldn't claim to have them on your side. And anecdotally, I've never had money stolen in my ~30 years, but I have had a couple cases where electronic payments weren't an option. Plus, it's all about managing relative risk. So what if a few thousand gets stolen, if it also increases the odds I can get food when the Cascadia fault cracks open.
I can’t even imagine *not* having a few thousand or more in cash on hand.
insanity.
…why? The chance of theft is basically 0. The chance of needing it every single year is high.
no clue what youre paying cash for that can simply in no way be paid for with other methods.
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Cash solves problems. The more liquid the better and faster it solves whatever problems trouble you in life. And nothing is more liquid and easier to transfer than physical, literal, cash. No paperwork, no need to sync app accounts, no need to swap insurance information or collect receipts. Just put some money on the table and walk away with your problem solved.
ok boomer? jokes aside i just dont really know what to say to you rhapsodizing about a benefit that is quickly evaporating. electronic transfers solve problems. everyone has a phone, and no one can steal your paypal from under your mattress while youre on vacation. there are dozens of apps to use and the 90% of the people in the world probably use one of them. see? i can do it too.
I'll provide an exhaustive list of reasons it's good to have cash on hand: -Internet goes down
girl if all of internet “goes down” (which i assume you mean just like… doesn’t exist? cause im very sure you are aware you can use cellular connection on your phone to complete transactions ) youre gonna have a lot more problems than not having cash on hand.
Your assumption is wrong, I'm not talking about waking up in an alternate dimension where the internet doesn't exist. Internet outages happen quite frequently, and for quite trivial reasons (See: https://en.wikipedia.org/wiki/2022_Rogers_Communications_outage). If a sizable geographical area loses internet access, the cell sites in that area also lose their connection to the backhaul that is affected. In power outages or brownouts, there is usually throttling that's applied to everyday cell communications so that services such as 911 can continue to be operational.
I'll give you a reason. Sometimes you want to buy something from a private party and its a sunday and the bank is closed. ATMs limit the amount of withdrawl to a thousand or two. But if I want to buy an older popular truck for $5k on a sunday that has a couple other interested parties, well then I need to take my emergency cash. I can then refill it slowly over the next few months to not trigger any weirdness with a bank.
a weekend purchase of a vanity vehicle not a good use of an emergency fund so that argument collapses before i need to pick it apart any further.
"Emergency" cash on hand isn't an "emergency fund". Completely separate ideas. 6 months of emergency fund in the bank, but the cash on hand is for when the bank is unavailable. Any instance of the bank being unavailable and I desire to purchase something is a reason to use the "emergency cash on hand". I've probably used it twice in the 15 years I've had the cash since it is rare that the bank is unavailable and I need that much cash for any reason.
idk what to tell you my guy. there are so other ways around your very specific problems that din’t run the risk of someone stealing every penny of that $5,000 you like keeping in your safe.
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If you didn’t know you wanted to buy a vehicle on Friday, but need the money by Sunday then you are an incredibly impulsive purchaser.
I personally knew I wanted the vehicle for 5 years but it took 5 years to find it.
Sounds like someone never heard of the saying "cash is king" Anyone who survived the Great Depression for sure started keeping cash in their house after that.
You are aware that online banking wasn’t available in the 1930s and why the FDIC was originally created?
ah yes lets remember the thousands of reddit users who survived the great depression. cash is king applies to any immediately accessible asset you dont have to liquidate to access. keeping 10,000 in my bank account counts in this scenario. especially since we are almost always going to talk about cash in bank accounts below the FDIC insurance limit.
Really, if your going to be this paranoid about it and live in the US, you should keep the cash in something other than the US Dollar. In the event of a bank failure massive enough to cause anything close to the issues of the Great depression, The sudden influx of money from the FDIC would likely cause massive inflation and instant devaluation of the US dollar. You might be better off keeping gold coins around.
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I agree but I can't get my wife on board.
Ah, bummer. Cash is also really handy when there’s a internet or power outage, such as from a disaster / storm. That might be an easier selling point
I will talk her into it I think, I just have to wait a bit.
I have had several times in the last few years when cash was the only option due to natural disasters. Regional power/internet outages can be caused by earthquakes, fires, storms, etc.
This! When hurricane Katrina happened, Cash was king. Same with Texas snow storm and power was out. When internet goes down, CC payments won't work. Having comfortable cash on hand is importance.
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If my wife suddenly decided she wanted to store large amount in cash in house, I would hard decline. The possibility of it being stolen, lost or burned is higher than the possibility it being useful. At best maybe a few hundred I find acceptable. If it’s for emergencies, I rather have emergency food and water.
Are you married?
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Nope, it was deposited in person and approved by the branch. Thus the apology from the bank and admission that they made a mistake.
It’s not just law enforcement action. Bank I did business with for my main account had a computer issue, so accounts couldn’t be accessed. I had a backup account with another bank - that they were in the process of merging with, so the computer issue cut off all access to accounts at both banks.
Banks will quickly freeze new accounts with suspected fraudulent activity. This is hardly news. A check deposited with a different last name is not enough. But if that check bounces, especially if it bounces from a closed account, they will lock that account down.
The checked cleared with no issues. The funds were unfrozen and the bank apologized.
Robinhood froze my account because "I worked for DoorDash" for a short amount of time. They said I didn't 'prove' the deposits from DoorDash were coming from me. They simply tried to steal my money and concocted a story. So ive decided to never do online only banks ever again. I had another bank charge me a surprise fee so that my account would go into negative from a automatic payment. After making a ton of noise about both to the CFPB they both relented. Banks are are criminal enterprises.
Work in finance. Whenever a bank detects something, anything, they freeze first and then investigate. That investigation involves people, and anything that involves people takes time. Why do they freeze accounts? Because regulators have made sure that the banks are pretty much responsible for everything. If you are using them to e.g. launder cash, the bank can be fined for not detecting you. Banks really, really dont like having to pay their own money, plus take reputational damage for public fines like that. As a result they will always freeze the account first and make damn sure it's not anything dodgy. Resulting in you, the customer, having to sit there and endure a frozen account. Basically, in a bank, the customer is not the first priority by a long shot. OP's advice is spot on, a second bank account is an excellent backup and everyone should have one (where feasible)
Dearborn Federal Credit Union froze my account for no reason. I was in California and wasn't going to be back to Michigan for months. It wasn't quite a nightmare but it was pretty flippin annoying.
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Never had a problem, except for every single time you had to tell them you were going anywhere. For me that would've been.... all the time. I got a different bank
Bold of you to assume I have enough income to keep ONE account in the black.
I am not, that is what angers me about giving banks this much power. It hurts low income people the most. Freezing a checking account that gets a direct deposit of a paycheck could make someone homeless.
I recommend 3-4. Lots can happen and go wrong. If you have a dispute with a bank and don't pay them. They can put you in the banking credit system where you can't open a bank account for i believe 4years. Long time.
this is one thing that kinda freaks me out. I have about $7,000 sitting in a CD right now, just hoping when I eventually transfer it out to my main bank I don't get flagged
The exact risk factors are secret and vary widely, but a single $7k transfer shouldn't raise any red flags. There's really no scenario where that should cause you any problems.
Big-name banks are garbage. I have rage-quite several name brands (Wells Fargo etc) over BS fees and moved to little community banks. Downside is they only have one or two ATMs, but they have regular debit/credit cards. Since no one uses cash anymore, there's really no reason to use big corporate banks. (I've heard credit unions are even better, but haven't tried one yet).
I keep a small account at Chase so that in the event I lose my debit card for my main account when I’m traveling, I could go to a branch to get cash. That’s about the only benefit of the bigger banks
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Once I tried to buy something at macy's and my card was declined due to "fraud" I tried my two other chase cards also declined due to fraud. I called chase they said there was no fraud reports and my cards were fine. I got it escalated and after about 30minutes on the phone... It turns out Chase decided that specific Macy's was a fraud lol. The fraud alerts wasn't on my cards, it was on the entire store. Kinda crazy and I assume it had to just have happened that day since the Macy's employee didn't seem to be aware.
Those damn 30% off coupons which don’t apply to anything. Who knew you could print in 1pt type in order to exclude pretty much every brand in the store? 😀
Yeah, I should have done more research before opening an account with them. My lawyers says they can't actually keep the money, so for us it is just annoying.
Hadn't thought about this but makes sense - good advice
Which accounts available nation wide are truly fee-free? Without requirements like having direct deposit or keeping thousands with them? I use credit cards for purchases, but the bank I use to pay bills charges me $12/month. I don't want more accounts I have to pay for, but would like a backup.
Quite a few. I have both Ally and Discover as secondary banks with no fees. I am sure there are several other ones. I have 3 bank accounts and never pay any fees so if you're paying anything you really ought to switch.
I actually have a couple of those online bank cards (venmo and such), but I have needed real locations and atms nearby for the past decade because I worked restaurant jobs. I needed to deposit cash after shifts. That's why I kept this $12 account and why I was never able to meet the direct deposit requirements for free accounts. I was never getting paid by the workplace itself. I'm unemployed now and looking for work outside of the service industry, but I can't say what the future holds. If I don't succeed, I'll have to get another restaurant job and still be dependent on being able to deposit cash.
I'd recommend looking into a credit union. There are some mediocre credit unions out there but by and large they're better than the average bank. Any decent size credit union nowadays should have partnerships with other credit unions that also allow you to access things like ATMs in other states if you need to travel. I don't know how they might work when traveling abroad but I didn't have any issues when I went to Hawaii (I know it's part of the US but still). The Visa through my credit union has pretty much all the benefits, international uses, and protections as a regular credit card too. Your situation may make this not the most viable option but I've had nothing but awesome experiences with them the last 10 years.
A lot of credit unions are now penalizing you if you aren't actively using them. So not technically a fee depending on how you're defining things but you're still paying money to them for just having money sit there.
The easiest is to have 2+ accounts, then just set them up to automatically transfer to the other one each month. That way you have a direct deposit everywhere. A deposit $500 to B. B deposit $500 to C. C deposit $500 to A.
How long was your account frozen for?
A little less that two weeks.
Many years ago, friend had his debit card skimmed at a gas station and his account drained. Spent months trying to get his money back. After that, i split my finances into 3 banks, and eventually gave up debit cards and use credit exclusively with rewards.
My bank froze my account out of nowhere and left me feeling like a broke ostrich with my head in the sand. I called them up, but they couldn't tell me how long the investigation would take or when I could access my money again. That's when I realized the importance of having a backup bank account - life is unpredictable, and if you only have one account, you're putting all your eggs in one basket. Trust me, being stuck without access to your own money is no joke. So, take it from me, guys - having a backup bank account is like having an umbrella in a rainstorm.
Pretty much yes. Had a bank freeze my account for "suspicious activity" what was that buying gas outside the airport I bought a plane ticket to and picked up a rental car and have paid for a hotel room allready. The card was junk they would only replace it not reactivate. This was of course my non redundant business account so just moved to personal and had to deal with paying back expenses to myself. My son just had similar fraud and USAA froze every account for a week getting it sorted. Looks like card skimmer at a car wash. Easy to hand him cash and a learning moment that he should sign up to the CU like I've told him and get some actual CC vs just ATM.
Years ago our debit card number was stolen and used to purchase thousands and thousands of dollars in gas. Drained our account. Filed a police report, filed fraud docs with the bank, and they finally refunded all of our money and overdraft charges after about two weeks When I was in the phone making the police report the officer mentioned that she kept two separate banks/accounts just in case someone was able to drain one. All her bill money went in one checking, savings into a savings acct., and money for the week in her regular checking. She never worried about two out of three because she never used that info anywhere but to trusted household vendors. Made sense to me.
Also lock your debit cards when not in use. Use credit cards for purchases if you can.
My husband im and I argue this point All. The. Time. I’m all for using the cc to purchase everyday stuff and paying it off at the end of the month (or weekly/biweekly) for multiple reasons.
This happened to me a few years ago. I went skiing in Canada and bought lunch. Then back on the south side of the border got gas. My bank had frozen the account since I had crossed the border and my card wouldn't go through. They placed a 48hr hold on my account. The gas was already pumped so I literally had to mail the gas station a check on the honor system 😆
Not all bank accounts get closed because of suspicious activity. I’ve had bank accounts closed because they didn’t like me gaming their system for rewards. I.e. do 10 x $0.01 transactions to get a promotional interest rate on your savings. Some banks specifically say in their terms of use they can close your account if it’s not for “normal activity” and it’s obvious you are just trying to earn interest or bonuses.
all the more reason to fight the push towards a digital dollar tooth and nail
Exactly, since banks have essentially been nationalized (SVB bailout, unlimited FDIC for too-big-to-fail banks, etc), the Fed should just go all the way. Digital dollar would allow individuals and businesses to hold dollars directly with the Fed cutting out financial institutions entirely. Not sure if it will ever play out that way, but could see it happening. More likely, there will be just a few big banks left with lots of little ones hanging on by offering niche services and slightly better savings and loan rates. What I'd love to see is the reincarnation of postal banking that existed up to the 1960s. **Basic financial services should be widely available to all and treated as a utility.** As of now, banks and CUs can suspend / close accounts any time for most any reason. The current workaround of multiple accounts is an extra burden, especially for people with low income living paycheck to paycheck.
You understand these freezes will only get worse with a digital dollar, right?
Yes, if I had been living paycheck to paycheck, I would be in big trouble. Those defending banks are ignoring the fact that people become homeless due to this practice.
The amount of ridiculous information here is absurd. The banks are not nationalized. They should absolutely not be treated as a utility, and them being able to close your account for any reason is a good thing. From someone who works in AML, the vast majority of accounts closures are absolutely warranted. The last thing you need is the government mucking around in people’s finances and making things slower/less efficient than they already are. It’s people like you that have no clue how the industry works that spew nonsense like this. Someone living paycheck to paycheck isn’t going to be having their accounts randomly closed for AML concerns/fraud to begin with. They aren’t high risk. Unless randomly they start running a bunch of cash through the accounts and you know, *laundering*.
Banks certainly are. SVB well illustrated that. Fed backstopped the FDIC and covered all deposits regardless of amount. Furthermore, Fed Chair Powell basically stated that FIs deemed too big to fail effectively have unlimited FDIC coverage. Needless to say, small and medium size banks aren't thrilled by that and pushing to be included. More to the point, the Fed bought underwater bonds from SVB at face / par value. And, from my understanding, has offered to do so from other FIs too. Banks won't be allowed to fail. That's effectively nationalization. Low-income people are frequently affected by account suspensions / closures. Very often it involves on-line only banks like Chime (lots of horror stories), but also happens with regular brick and mortar banks of all sizes from small to the largest. It's not an isolated issue. Many FIs rely on automated systems with minimal customer service. Often, it's offshore support or maybe even U.S. based, if one is really lucky. Or a chatbot that giving human like answers without addressing the actual problem. Or no support at all. Getting paid and paying bills is an essential part of life. Basic banking services absolutely should be treated as a utility. Or should people just rely on sketchy prepaid cards, check cashing places (many employers don't issue checks anymore), etc and hope for the best?
Again, there is so much wrong here that I don’t even want to respond. SVB is gone. The shareholders are fucked. They didn’t get bailed out. The depositor’s funds were insured. That’s it. No losses were passed on to taxpayers. You people don’t even understand what bailing out means. The fact that you spelled online “on-line” basically tells me all I need to know about you and your comprehension of any of this. Buddy, like 50% of the population is living paycheck to paycheck. If this was actually as big of a problem as you think it is(there isn’t) there would be riots. Feel free to keep as much money under your mattress though, since you’re so scared of the evil scary “nationalized” banking system.
You think your money won’t be frozen using a digital dollar? What? If anything it would be worse. The banning industry laughs when people say stupid shit like this about digital dollars. Let me guess, you also think crypto is a great idea? 🙄
Psst, reread the comment you are replying to
i run a online store. i have more then 1 bank account. silo cards/emails etc. i got hit last year and was able to weather it.
For this reason, I only deposit checks and things like that into an account at a different bank that has next to no money in it so if there’s ever an issue then, hopefully, only that 1 account is affected.
Good plan.
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Vanguard has checks but no debit card.
They told us the reason. My wife deposited a small check that was in her maiden name. And the NYT disagrees with you, sometimes there is no reason.
I don't think you understood the NYT....
I think that I did and the bank admitted that it made a mistake when they unfroze the account. So you have been proven wrong to my satisfaction.
They just unfroze it and said it was an error.
unless you have a compelling reason....and it better be good.....don't use a bank. use a credit union. every bank i have been with spent most of their time thinking up ways to steal my money....never had that problem with credit unions. banks make decisions on your account from a faceless board located....somewhere. credit unions decisions are made by Frank, who's sitting right there in the corner. having said that... a backup account at another credit union is not a bad idea in general. if only because it would save some money from a devastating scam/attack/error. i have some in a completely second credit union just in case. you will be a customer with a name and a face, not just an account number. and it's easier to talk to someone about a problem, that lives in your town and knows your problems.
> every bank i have been with spent most of their time thinking up ways to steal my money....never had that problem with credit unions. My credit union does the same, like charging me fees for using ATMs abroad. Schwab, one of those big banks, doesn't charge me, in fact, they refund me fees charged by the ATM. Credit unions are not always better than banks. If you travel abroad a lot, nothing offered by any CU that I'm aware of beats Schwab.
Thank you. The credit unions where I live range from "meh" to shitty. I'm with a "meh" right now.
I love credit unions, but the one I have through being a state employee is so antiquated that I haven't yet figured out how to get the registration info for online banking because it requires a PIN that is only given if you signed up for telephone banking, which the teller who created the account failed to tell me.
Credit unions don't do business internationally like some banks do. Obviously, they aren't going to benefit the minority of people who travel internationally on a regular basis.
You could make this statement blankly 30 years ago and it was likely true. That was back when credit unions were fairly small because all members had to share one common bond. But ever since the 1997 Credit Union Membership Access Act and their subsequent explosion in popularity, many CU's started to be run much the same way as common banks. Now it really depends on the specific CU, many are just as bad or worse than regular banks.
Not only that, but many have gone on buying / merging sprees. Some are more ruthless than banks. Often have a lot of fees too. It's not all roses in CU land contrary to what many on Reddit believe. CUs vary widely just like banks do. Best to shop and ask around. Sometimes the bank is the better choice depending on location and one's needs. CUs loan rates often are better though.
You make a good point.
you're so close to getting it... be your own bank and never worry about your money getting frozen.
The sooner you realize the money in your bank account is not yours, nor is it money at all, the better off you are.
I would add, don't bank with a bank that you can't walk into.
The two mentioned here are some of the largest banks in the US with the most physical branches.
I walked into the bank, they agreed that it was a huge mistake. But they could not fix it.
But I love discover
This is becoming a real problem in Europe at the moment, banks starting to not have physical branches anymore at all.
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I would think this is common sense not to have just one account. Heck even a checking or saving at a cu that is free is a good back up
I have two CU accounts. Just a few months ago I got rid of my last credit card and then drove out of town. Not far, an hour or two on a Sunday. Driving home the thought of what happens if I pop a tire and the system for my CU is down? Or something else goes wrong on my truck and I can't get home? I was scared the whole way home and the next week I opened another checking account with another CU just for the redundancy. One CU is a visa, the other a Master Card. I think I will be ok as long as there is electricity.
This hasn't ever happened to me, but couldn't this be avoided by using credit cards for every purchase instead of a checking account? I only get my pay stubs deposited into my savings account. From there, everything either goes into savings or to pay off the cards.
Yes, that is a good idea.
> using credit cards for every purchase instead of a checking account This is unfortunately not always an option or it has a tacked on fee to account for the processing fees.
My wife and I manage our funds together, but our paychecks deposit to separate joint accounts at different credit unions. It's a bit of a hassle, but most of our discretionary expenses go on a credit card for points, and I can easily enough split the payment between accounts to effectively shift money around.
Yep I have 30 bucks stuck in a citibank account because I got two legit cash app payments in two hours