What Happens if You Send Money to a Closed Account?

Last Updated on October 13, 2022

What happens if you send money to a closed account? Sending money to a closed account is like mailing money to an address that does not exist. Sometimes, the bank will send a notification email informing you of an issue; thus, providing an option to recover the money.

If you mistakenly send money into a closed account, the bank would reverse the transaction. It typically takes 24 hours for money sent to closed accounts to be reversed to the sender. Nonetheless, you must contact the financial institution if you don’t get reversal within 24 hours. 

Some banks have and follow specific guidelines regarding misdirected funds, so all banks do not respond or react in the same manner.

You should also check with your financial institution, bank, or mobile money provider (Cash App, PayPal, Venmo, etc.) for advice.

Will money bounce back if the account is closed?

Yes, the money you send to a closed bank or any financial account will bounce back to your account. Sometimes, your bank or mobile money provider may be able to reverse the transaction and credit your account.

In situations where old account numbers are recycled to new customers, your sent funds are delivered into the active account and won’t bounce back. Moreover, if the closed account you sent the money to owes the bank, they have the right to recover their debt. So, you might not be refunded the complete transaction amount.

What Would Happen If You Send Money to a Closed Account?

Typically, when you send money to a closed bank account number, either your bank or the recipient bank refunds or returns the fund to your account, which remitted the fund. If funds are not reversed within 48 hours, depending on your bank and the recipient bank, contact your bank with the remittance information.

It is likely that the money lies in the remitting bank’s sundries account. If sundries account is the case, the remitting bank holds the funds and would reverse the transaction sooner, and faster if you contact them.

As mentioned earlier, funds you send to a bank account that does not exist longer go to a suspense account. The money will be resent to the remitting or originating bank account as a closed or invalid account.

The number of days it takes to get a transaction reversal depends on your bank and the closed recipient bank account. The duration or process either bank’s ACH (Automated Clearing House) takes decides how long before you get your money back. The rule of thumb is to contact your bank and the recipient bank. You may request to contact the manager or the ACH management to find out how long it takes recover funds sent to a closed account.

In cases when the closed account may have been recycled with similar account information, the money will not bounce back.

Also, if the receiving bank or financial institution is responsible for the closure of the bank account, the bank can freeze the funds. If the bank account was closed for inactivity, and the account holder owes the bank, the bank has the right to accept the money and pay it to the negative balance. Typically, the received funds must be enough to cover the debt. Most banks will send an email notification to the account holder or mail them a check.

How long does it take for money to bounce back from a closed account?

Depending on your bank and the recipient bank policy on returning deposits to a closed account, it takes an average of 7 business days or more. The process and duration of the bank’s ACH also determine how long it takes for money sent to a closed account to bounce back. Also, if the closed account has a negative balance, the bank can take additional days to review and deduct your money to the negative balance.

How do you get money out of a closed account?

Well, in the first place, the bank, including your bank and the non-existing or closed recipient bank, will not store the money sent since the account is closed. But when there are outstanding fees or negative balances, the bank has the right to recover the balance from the money you send to that account before refunding it. So, contact your bank and the receiving bank to hasten the refund or reversal process. If your money is deducted, the previous account holder of the closed account will be notified.

How can you tell if a bank account is active before sending money?

Before you send money to an account, you’re unsure is closed or still open, you may visit the bank or financial institution to find out about the account status if it belongs to you. If the bank account is not yours, following the Privacy Act of 1974, the bank is not supposed to inform you about the closed account.

However, you can tell if a bank account is active by asking the account owner or holder to confirm the account information. Depending on your banking app, your bank may be able to inform you whether the account is closed by not reporting that your selected account does not exist.

Final Thoughts

Sending money to a closed bank account is not the end of it. If the money is not returned to the sending account, it could be in the sundries account.

The best way to recover money sent to a closed account is to contact the sending and receiving banks with the transaction information. Also, inform the person you’d be funding or sending money to for compliance.