Huffpost Money
Catherine New Headshot

Bank of America To Keep 'Zombie' Checking Accounts Closed In Policy Shift

Posted: Updated:
Starting this week, Bank of America said it will no longer allow electronic deposits or debits to reopen a closed checking account.
Starting this week, Bank of America said it will no longer allow electronic deposits or debits to reopen a closed checking account.

NEW YORK -- Bank of America said it will stop zombie checking accounts from coming back to life when they receive an automated electronic transaction.

Starting this week, the bank will no longer allow electronic deposits or debits to reopen a closed checking account, according to bank spokeswoman Betty Reiss.

"We have been looking at [the change] since late last year and it just went into effect this week," Reiss told The Huffington Post by phone on Monday. The new rule marks a shift in bank policy, which previously allowed electronic transactions to reactivate an account after the customer had closed it. Reiss said the change was based on customer feedback.

The Charlotte, N.C.-based bank wasn't alone in allowing electronic transactions to reopen old accounts. Complaints about checking accounts rising from the dead have long been a source of contention between customers and banks.

As The Huffington Post reported earlier, the reopening of an old account can be unexpected at best and costly when overdraft fees and other charges pile up if automatic payments draw from an empty account.

Electronic deposits and debits have become increasingly popular in recent years. Electronic banking is not only convenient, it has become a key way to avoid fees. For example, many accounts require a direct deposit to avoid a maintenance fee.

For banks, electronic payments serve another purpose: customer retention. Untangling from a complicated web of automatic payments and deposits can be a major obstacle for consumers to switch banks. Nearly one in five customers said they considered switching banks in the last year, according to a recent survey from Consumers Union, but 63 percent said they did not switch because of automatic payments.

In a report earlier this year, Consumer Union published recommendations for banks to help consumers move accounts. Among the suggestions was that a bank should be responsible for transferring automatic credits and debits from old to new accounts, rather than a consumer.

This policy shift by Bank of America does not go nearly that far. Bank of America's Reiss stressed that it's up to the customer to notify depositors and creditors of new account information and to allow time for incoming payments or deposits to clear.