What do I do if the bank closed my account?

Narrator
00:00:02

Welcome to the Ask Ralph podcast, where listening to an experienced financial professional with over 30 years of experience can help you make sense of confusing questions, current headlines and industry trends about taxes, small business, financial decision making, investment strategies, and even the art of proper budgeting. Ask Ralph makes the complex simple by sharing his real world knowledge from a Christian perspective with all things financial.

Now, here's your host, Ralph Estep Junior.

Ralph
00:00:31

We're going to start off with a question tonight. And have you ever felt the panic of realizing your bank account had been closed without warning? Have you felt the frustration of being locked out of your own money, unable to pay bills or access your hard-earned cash? Well, don't worry because tonight we're getting into a listener's nightmare scenario.

I'm going to answer the question, what do you do if the bank closes your account? So stay tuned and learn how to navigate this financial crisis and protect yourself from future account closures. Something you never want to go through. I want to welcome everybody to the show. I want to thank you for joining me.

And this is your weekly opportunity to get your questions answered. Feel free to ask your questions right in the chat. If you do, just put a question mark and a colon there for me, if you don't mind, and I'll get to them. Feel free to make your comments. I want to start by recapping the Alzheimer's walk we did.

I got a little quick video to play here that talks about the walk. So I'm coming to you live here this morning from the Alzheimer's walk here in Wilmington, Delaware, and we got team the Ask Ralph show. And I want to just thank everybody for your support. We raised just under $2,800. And the team is here. We're getting ready to get started. So again, every little bit helps and let's knock Alzheimer's out of the park. So thanks again for supporting the cause.

So we're coming up on the finish here of the walk. It's been a great day. A lot of people out here supporting Alzheimer’s. So thanks again for anybody who joined us for the walk and for all those who made donations. We really appreciate it. Well, again, I want to thank everybody who took part in the walk. We raised almost $2,800.

So that was a really great time. And my wife, Jennifer, sends out her thanks for everybody that got involved as well. Now, if you don't feel like asking a question tonight, you can always ask your questions by going to justaskralph.com. And don't forget. We do this daily. I've got a daily podcast going on here.

Yes. I am crazy. Do this every day. You can catch it at askralph.com. We also post something to YouTube and Rumble. We do a daily blog. So if you're interested in getting on our mailing list, if you go to askralph.com, you can join it right there and one final thing, and it's not working tonight. I'm not sure why we're not able to connect our private Facebook group, but hopefully they'll come over here to YouTube.

I want to start with tonight's listener question. And this one comes to us from Hunter. And this is what Hunter, she said, she said, "Dear Ralph, I'm in a state of shock and desperation. I went to use my debit card yesterday to buy groceries for my family, only to find out that my bank account had been closed without any warning.

The cashier looked at me with pity as I fumbled to explain why my card wasn't working. I left the store empty handed and humiliated. I've got bills due, including my mortgage and utilities, and I can't access my money. My husband and I have been living paycheck to paycheck, trying to make ends meet, and now this feels like the final blow.

I'm scared we'll lose our home or have our utilities cut off. What do I do now? How can I prevent this from happening again? I feel like I'm drowning in financial uncertainty. Please help me." And this was signed Hunter. Hunter, first, I'm going to say that really stinks and I feel your frustration. And unfortunately, you're not the only one that's faced this situation.

And yes. It's incredibly stressful when it happens. Yes. It's embarrassing. It causes fear. And especially when you're thinking about not being able to make your mortgage payment, you're thinking about losing your home. You're thinking about having your utilities disconnected. So tonight we're going to talk about the immediate concerns.

And I'm going to talk to you how to get back to some long-term financial stability. But before we get started, I want to start with a Bible verse. I always like to ground things in scripture. And I found this one in the book of Proverbs. This one is in chapter 2, verses 6 to 8. And it says this. "For this the Lord gives wisdom; from his mouth come knowledge and understanding.

He holds success in store for the upright, He is a shield to those who walk is blameless, for He guards the course of the just and protects the way of the faithful ones." And I really thought that was perfect for tonight because it reminds us that even during challenging times, the first thing we need to do is seek God for wisdom and trust in his guidance.

And I want to share a story with you. Now, many of you might know this, or you don't know this, when I was 26 years old, I was an executive vice president of a credit union. And I dealt with these situations just about every day. And I was face to face with that. And I remember one particular story, I had a member account and he, this particular account had been overdrawn for weeks.

I'm talking week after week. And we had attempted to contacted them. We had our member service people contact them. I actually reached out to them as well. We got no response, and we came to this point where we had to make a difficult decision to close their account. And listen, that's never taken lightly, but it's necessary to protect the credit union and others.

And it wasn't about just locking them out. See, that was the immediate thing. But if you think about it, there are some real far-reaching consequences to this that many people don't realize. Most people don't realize when that bank shuts it down, the credit union shuts down your account, it may very well be reported to credit bureaus.

Might be reported to this thing called ChexSystems. Those ChexSystems programs will challenge you if you go to open new accounts, it's the way the banks and other financial institutions and credit unions protect themselves. And if that wasn't bad enough, you might get sent to collections. And if it gets sent to collections, that could impact your credit, and it leaves this black mark on you that follows you.

So you don't want to get to that. So you might ask Ralph, how do I bounce back and rebuild from this? Well, I'm going to give you some immediate steps that you can take. First thing you want to do. You want to contact them immediately. Ask a simple question. Why was my account closed? Now this particular person at the credit union, we tried to contact them.

We sent letters, we made phone calls, we did all those things. But it could be that your account was closed because it's overdrafted. Maybe there was fraud on your account. A lot of people don't know this, but in Delaware and some other states, accounts could be closed based on inactivity. And a lot of people don't know that if you have an account that has been what we call dormant for five years, and this is Delaware rules specifically, if you've got money that hasn't been touched in five years, financial institutions are required to send that to the state, but you've got to understand.

Number one, I said, contact them immediately and understand the reason why your account was closed. The second thing I'm going to recommend you do is request a written explanation. You want to have this documentation so that if you need to battle this with the credit bureaus, with a collection agency, or maybe with ChexSystems, you want to have some things you can go to take care of that.

Third thing, let's say you still have some money in your account. Maybe it was closed because of fraud. Maybe it was closed for some other reason. So you want to go and retrieve those funds right away if you've got any available. The fourth thing you must do, you've got to address any outstanding issues.

If your account is overdrawn, you got to bring it back to zero. You got to pay the fees and settle those debts. And then you got to start rebuilding your credit. And the next thing I'm going to request to remind you to do is check your ChexSystems report. Now you can go right to chexsystems.com. That's CHEXSYSTEMS.com. And what you want to do is you want to dispute any inaccuracies you have there. And one of the people in the chat just mentioned that this happened to an old HSA of his, and he had to pay taxes on the amount, but it was his own fault. So it's one of those things you got to live in and learn because you never know when that kind of thing is going to happen.

I'm going to post this comment up here before I forget. So I appreciate the, that's from AI goes to college and that's a really good point. You got to pay attention to what is going on with your account. There's no doubt about that. And once you've gotten past that, I'm going to move on to step number six and one of the things you might want to consider is opening what's called a second chance account. A lot of credit unions, a lot of financial institutions will give you this second chance. It's an opportunity to rebuild your banking history. Because trust me, if your account was shut down because of overdrafts or by fees or some kind of fraud, and they report that to ChexSystems, I don't care what financial institution you go to, they're going to look at that and they're not going to allow you to open up account.

And the last thing I'm going to tell you is consider a prepaid debit or credit card. And that may be something you can use to bridge that opening to a new account. Well, let me share a wild story with you. This one will shock you. So this one day I never forget. I was sitting in my office at the credit union and all of a sudden, the secretary says, Ralph, you got to get on the phone right away.

I said, Pat, what's going on? And she says, it's action news. They want to talk to you right away. And I'm thinking, okay. What's going on here? What did I do? So I got on the telephone line, and I remember the reporter's name. She was very friendly. She says, Mr. Estep she says, I'm going to come down to the credit union and meet with you because we've got some members who had this crazy thing happen to them at the ATM machine.

And I said, okay, that's fine. You know, come on down. I'm here. I'll talk to you. And it was probably about an hour later. She showed up, she had her camera crew with her. She had her, the two members going on and they sat down on my office. I said, well, what's going on? With that, the husband says, Mr. Estep, you're never going to believe this.

He said, we went to the convenience store, and we needed to get 40 bucks out to pay for what we needed to buy there at the convenience store. I put my card in, I entered my pin number and all of a sudden, the machine just started throwing out money. I mean, it was spitting out money after money, after dollar, after dollar.

Well, it turned out it spit out almost $10,000 and here this member standing in this convenience store, this ATM machine, he was expecting to get 40 bucks, and this thing is just throwing money out, left and right and left and right. And the sad part of the whole story was, here these two members were really struggling.

They're standing in a convenience store. What else do we do? They said we contacted the local news, and like I said, they came to see me, and it was a tense situation when they came in my office. Because the first thing they said is, you know, we've been really struggling lately. We've been having a hard time making ends meet.

We think we might lose our house, and boy did they put me on the spot. But I also had to look at it from the standpoint of they were very honest about the situation. We pulled our reports from the ATM machine and our report showed that they only got $40 out. So where all this money came from, I mean, literally it was a stack of cash, but the good news was I had some quick problem-solving skills, and I was able to maintain communications.

And in that particular case, we gave them a little bridge loan. I remember correctly we gave them a home equity loan. So if you ever see somebody in the convenience store standing in front of the ATM and it looks like a casino machine, like a machine going off and spitting out money, maybe it's the same situation.

But I share that with you because I wanted to give you this key takeaway. No matter what happens in life, there's always a solution to unexpected situations. So let's get back to our topic at hand. You might be asking Ralph, how do I prevent my account from getting closed in the first place? And I think AI goes to college mentions this right in his comment.

He says Monitor your account regularly. That's what I'm saying. Stay on top of your transactions and balance to avoid overdrafts. That is so important that you do that. I would say 9 times out of 10, you're going to know what's going on with your account. Second thing I'm going to recommend you do. Regardless of whether your account is close to being overdrawn or anything, all of the banks have great technology now. So one of the things I'm going to recommend that you really do is set up alerts. You know, many banks and credit unions and financial institutions offer these texts or email alerts if your balance gets to a certain point, or if you've got a large transaction, because it'll do a couple of things.

Number one, it's going to prevent you from overdrafting your account. And no, I will tell you another funny one. You can't use this excuse either. I once had a credit union member say, my account can't be overdrawn. I've still got checks. Doesn't quite work that way but setting up those alerts are going to help you immensely.

It'll keep you in line and protect you from any fraud. You'll be able to put things to rest right away. Another thing you want to do, number three on my list here is maintain a positive balance. You really ought to keep a cushion in your account to avoid accidental overdrafts. You never know when something might be presented.

Maybe you sent somebody a birthday check a year ago and all of a sudden, they cash it. I know there's a lot of people that get involved in those situations. You always want to keep that cushion. Another thing you want to do, and this member that I talked about tonight did not do this. You want to respond promptly to bank communications.

If your bank or credit union or financial institution reaches out to you about any issues, it is imperative that you respond quickly and professionally. Don't just bury that notice in the drawer. Don't delete that email or that voicemail. Go do something about it. Another thing you want to do, like I talked about that whole inactive, a dormant account thing is you want to make sure you're using your account regularly.

You don't want to be in that position where your account is closed because of inactivity. And look, it's a two-way street. The banks and the credit unions want to provide services, but they also need to protect the rest of their people that are involved there, the investors. So it is hugely important that you be proactive, and you be responsible to reduce this risk.

Now I'm going to open up the floor now to questions. If anybody has any questions, feel free to enter them in the text here. And while you're there, if you want to mention where you're from, we've got a few people online tonight. I don't have a lot of other questions to talk about tonight, but I really wanted to spend a few minutes talking about that banking thing.

Because as I see our economy getting worse, you know, there's more of an opportunity for people to find themselves in a situation where their accounts are overdrawn or something like this. And I just want to give you some ideas of how to prevent that in the first place. So it looks like I've got a question.

So let's post this question here. And this one comes from AI goes to college. He says, what is your opinion on annuities as a way to avoid risk in retirement? All right. Well, so here's, you're going to hear my spiel on annuities, and I've done some shows on this. I would encourage you to go out to askralph.com, click on the search icon and look this up. The problem I have with annuities is more so from a front-end. I feel like they're great investments for the people who sell them, but I'm not always sure they're great investments for the people who get them. The problem with annuity by its very nature is usually it's front-ended with a lot of fees.

So if you go to a broker to buy this, you're paying a lot of money at the front end to get into that annuity. That said, annuities can be a great hedge. You mentioned this in your question, to avoid risk in retirement. That's the benefit to the annuity. The annuity is going to maintain its value. Now, the problem that you run into with an annuity is if you buy an annuity and then you see a time of significant inflation, or you see a time when, you know, the value of interest goes up, then you bought an annuity that might not be a good investment because you might not be getting the same return on that investment you would get if you could be more nimble.

And I'm not saying that annuities are bad. I think they're a good part of a diversified portfolio. Like I said, I'm not saying they're terrible investments. I just think you have to think that process through and determine what is the best for you. But I wouldn't put all your eggs in one basket. But if you listen to me, you know, I never tell you to put all your eggs in one basket.

Maybe you have balanced annuities. Maybe you look at some certificates of deposit. Maybe you look at some stocks and some bonds. This is a time to really enlist some people around you that have good financial knowledge. This is not the time for do it yourself. You know, a lot of people get themselves in trouble because they take this do it yourself mentality.

They don't want to pay anybody. They don't want to go and have a consultation and really sit down with somebody and talk about what are their options? You know, we've talked about this on the show before. You can get into CDs that have very little risk and you can ladder those CDs. It's something my wife loves to do.

You can ladder those CDs and that way they will reprice themselves and if you get into a market where interest rates are going up, or there's a lot of inflation, once those CDs come due, you can repurchase those and get a better deal. So that's one of the things I'm going to talk about there.

But that's a great question. It's a question I get a lot of times. And again, you just have to be cautious about the cost of the annuity and really read the fine print. And I'm not an annuity expert. I don't sell brokerage products and all things. So that's a question you might want to talk to your broker or somebody that you value their opinion on, because there are some annuities that are better than others that don't have all of these front-end costs.

The other problem with an annuity, quite frankly, is you might run into a situation where if you want to cash out of it, you might lose some of your investment. So again, you've got to look at those and decide what is best for you. And like I said, there's no one size fits all thing with any of these things.

There were always different ideas and things that you can talk about that could improve or make your situation better or worse. Now I want to give you a little teaser. Now, next Wednesday, I'm going to be covering a politically charged topic. I was doing some research on it today. I'm going to be talking about what they call the wealth tax.

And this has brought about a ton of questions. You hear both political sides talking about the benefits of it, the downsides to it. Well, I put that all together and I'm going to be doing a show that will play next Wednesday. That's our normal release of our podcast, either video or audio. And I'm going to really dispel a lot of the myths that surround that because there's so much misinformation going on about that wealth tax. And I'm going to give you a little spoiler. I'm not a big fan of the wealth tax. So it looks like we've got another question that's come in here. Let me post this one up. This one is up from Chris and Chris says, what is the best way to be financially prepared as a first-time home buyer?

That's a great question. And you know, it's funny, I was just talking to a client this evening. Now this client lives out in California, and her and her husband, you know, they already own a home, but they're thinking about moving. They're not happy with the politics in California and the taxes in California.

And she basically asked me this question. She said, Ralph, is it important that I buy a home? So Chris, I'm going to start with saying this. I don't know that it's always the best choice to buy a home. Again, I did a show on this a couple of months ago. You've really got to weigh the pros and cons. There's this belief out there that you haven't arrived, you haven't gotten to a point of success until you own your own home. And I got to be honest with you. I felt that at times. I felt that myself. But so if you've decided that it's a good time to buy a home, here's a couple of things I'm going to say. Number one, you don't want to throw every last dollar you have into the purchase.

I've seen that happen way too many times. People who have scrimped and saved and worked hard to get the house and they leave the settlement table and they're feeling gum wrappers in their pockets. They got nothing left because here's the secret that you're going to learn if you buy a house.

And trust me, I've been through it Chris, you probably seen it in your own parents. You buy this house, you think everything is settled, but then come the real expenses. I did a show about that too, about the unexpected expenses of home ownership. A lot of people don't think about these things. You think everything's going to be fantastic.

I remember, I'll tell you a quick story. I bought my first townhouse. I think I was like 22 or 23 years old, and I felt like, hey, this is really an accomplishment for me. I remember going through that process. It was a nerve-wracking process. I remember I got a binder that was about this thick of stuff that I had to go through answering this question, answering that question.

And I'll tell you what, I went to settlement, and it wasn't two weeks later I'm sitting there in the rec room and it's summertime and all of a sudden, it's getting hot. And I'm thinking, what in the world's going on? So I go and look at the thermostat. It's about 85 degrees in here and I'm thinking something's up.

So I go outside. I look at the air conditioner, the outside unit, and that thing is not moving at all. It's not got any circulation at all. So I was like, well, this isn't good. So think about this. I'm two weeks into this house, call up the HVAC repair man and whammo, you got a bill for $5,000 because guess what?

Your outdoor unit just broke. And guess what? Without the outdoor unit, you've got no air conditioning. And trust me, I had spent every last dollar I had to get into this house. I was scrimping and saving to get there. So I think Chris, my big first takeaway is have some reserves, have some money set aside for those rainy days, those unexpected expenses, because you're going to have them.

There's a whole lot of things you can do to mitigate that. You can get a home inspection, you can have a mechanical person come out and take a look at everything, but trust me, you're not going to find everything. And there's all kinds of unexpected things. How do you know how much your electric bill is going to be?

Maybe you have a bill for water or sewer or something like that you just weren't expecting. So I would say, if you want to be financially prepared for your first home, make sure you've got an adequate money for deposit, you've got the money for some because a lot of people don't realize this.

Let's just say you're buying a house it's $200,000. That's not going to be your full final price because you're going to go to settlement. You've got to pay your settlement attorney. You're going to pay for a survey. You might pay for some, some prepayment of taxes. There's this fee and that fee. I mean, they will nickel and dime you at settlement.

So you better be prepared. Here's what I'm going to tell you. If you're going to buy a house, I would have about 10 percent of the sales price set aside for a rainy day. You're going to need about 10 percent at the settlement table, and I would have about 10 percent set aside. So if you're buying a $200,000 house, you better have about 40 grand in the bank.

Now, banks will qualify you, mortgage companies will qualify you for less than that. But I'm just saying that's Ralph's advice here tonight is have about 10 percent set aside for those rainy-day things, that air conditioner that breaks, or, you know, maybe you've got to make some last-minute improvements or there's little odds and ends you want to buy.

Cause the thing is, when you go into a new home, I don't care whether it's new construction or old construction. It seems like you always find something that needs to be worked on. So Chris, I hope that answers your question. If anybody else has any questions before we wrap up tonight, I'm happy to answer them.

And I hope you're getting value out of this tonight. If you're getting value, I want to encourage you to check out my daily show. And like I said, we're going to do this every Tuesday night. So if you've got questions, feel free to bring them to the show and we'll get them answered.

It doesn't look like we got any more questions tonight, so it's going to be a shorter night, but that's okay. We still provided some value. So let me close with this. Many people are feeling overwhelmed by their current financial situation. Maybe you're like Hunter, you're dealing with closed accounts.

Maybe you've got financial challenges. Well, the first thing I'm going to tell you is you don't have to face those things alone. You are not on this by yourself. I'm here to help you. I can help you find that financial freedom. I did a show earlier today. We talked about breaking free of that bondage of debt and it's truly bondage.

It shackles you. But at the same time, I want to help you align that financial growth with your Christian values. Maybe you're feeling stuck like Hunter, you know, I don't know how I'm going to pay my mortgage. I don't know how I'm going to pay my utilities. I'm watching my dream slip away Ralph. I'm struggling with financial instability. Maybe you're living paycheck to paycheck. You know, there's a huge amount of the population.

I think I read it earlier, 46 percent of the population lives paycheck to paycheck. Maybe you're feeling frustrated. You're feeling hopeless. Maybe you're a small business and you're trying to balance your personal finances and your business needs. It seems like you can't get any money out of the business because the business needs it.

Maybe you feel like a lot of people, you're taking one step forward and you're getting shoved two to three steps back. Again, there is hope. You can break free from this. I promise you; you can achieve long-term success. Here's how I want you to do it. If you feel like it's the right fit, go book a call with me.

You go to askralph.com. When you get there, you'll see a banner. It'll say, book a call with Ralph. And what I'm going to do is I'm going to look at your unique situation. I'm going to talk about your goals. The things that I call big, hairy, audacious goals. We're going to sit down. We're going to assess your current situation.

We're going to look at your dreams. What are your goals? What do you want to do? And then I'm going to help you develop a personalized plan, not some cookie cutter approach, not something that you read online or watch some dumb YouTube video or TikTok. And they say, I've got all the answers. All you got to do is do this.

There is no one size fits all plan. It just doesn't exist. I was talking to somebody earlier and this person was in New York, and I said, if I want to come visit you, I got to do two things. Number one, I got to figure out where I'm at right now. So that's one of the things I do is I sit down and do an assessment with you where you are now.

And the second thing, we've got to have a financial roadmap to get us to the other side. If I don't know where I am and I don't know the destination I'm getting to, how are you ever going to arrive there? And that's what I'll help you do. I'll help you build that true financial roadmap. So listen, don't let another day go by feeling stuck.

Don't let it continue to make you feel overwhelmed. Let's create that plan. Let's set a path for financial freedom and spiritual growth. So as I always end the show, I want to tell you, first of all, thank you for joining me tonight. I hope you got value. I hope you tune in to the show tomorrow and the next day. Sign up for our email list. But as I always end this show, I want you to stay financially savvy.

Narrator
00:26:34

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