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What Happens if You Send Money to a Closed Account?

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If you send money to a closed account, the bank will decline this misdirected payment or return your money to you.

This situation can occur when your old account is tied to subscriptions or recurring payments. Or perhaps you mistakenly wrote it in your new work contract, sending money to a closed account.

What is a misdirected payment?

A misdirected payment occurs accidentally when money is transferred to the wrong bank account. It can happen when you misspell the recipient’s name or enter an incorrect account number.


What happens if you make a misdirected payment?

The bank may decline the bank transfer

Banks frequently identify faulty account numbers or closed accounts. When the recipient account is nonexistent, the system should show an error and prevent you from making the payment in the first place.

However, if your transfer went through, payments should still fail. You should receive your money back automatically.

The bank may reopen the account.

Sometimes, if you send money to a closed account, this act may result in reopening it. This can happen if the holder recently closed the account. In this case, a bank should be willing to help you and the recipient correct the situation.

On the other hand, sometimes the bank can be the one that closes the account due to prolonged account inactivity or because of an account freeze. In the event, it can be tricky to get your funds back, but not impossible. Contact the bank to explore possible solutions.

The bank may write you a cheque.

Given the transfer went through, sometimes financial institutions issue a new cheque. This way, the account holder recoups the missing money.

For example, new Korean laws now oblige the Korea Deposit Insurance Corporation (KDIC) to help recover misdirected payments. KDIC can take over the claim and seek payment through a court order upon the sender’s request.

After successfully recovering the funds, KDIC reimburses the sender, deducting relevant expenses.

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What to do if you send money to a closed account?

Usually, if you send money to a closed account, the bank declines the transfer, and the money goes back to your account. Therefore, you don’t need to do anything.

However, contact the bank within two business days if the transfer actually went through. They should provide you with a solution or take the initiative to resolve the situation.

Can I get my money back if it is sent to the wrong bank account?

If you send money to the wrong account, you can still get your money back. However, the success of retrieving the money depends on several factors, including:

  • How quickly do you notice the error
  • The cooperation of the recipient
  • The policies of the involved banks.

If you realize the mistake promptly, reaching out to your bank and the recipient’s bank is crucial. They can initiate an investigation to trace the money and potentially reverse the transaction.

Usually, the process depends on the recipient’s willingness to return the funds. However, there are now numerous legal tools that can assist the sender.

For example, new Korean laws now require the Korea Deposit Insurance Corporation (KDIC) to assist actively in recovering misdirected payments. At the request of the sender, KDIC can take over the claim, seeking payment through a court order.

After successfully recovering the funds, KDIC reimburses the sender, deducting relevant expenses.

Tips on how to avoid misdirected payments

Here are the steps that can help you ensure smooth financial transactions and avoid sending money to closed accounts:

  1. Thorough document and code review. Take the time to carefully inspect official documents and codes related to the direct deposit. This precautionary measure ensures your payments are well-protected.
  2. Validation and documentation. Double-check the accuracy of payment amounts and recipients. Keeping a clear record of planned transactions and their actual execution is a helpful reference.
  3. Prefer deposit cancellation. If you’re closing a bank account, cancel any existing direct deposit arrangements. This foresight prevents disruptions to your financial flow.
  4. Leverage tracking services. Embrace the benefits of tracking services. These tools let you identify and address any concerns at an early stage. It potentially enables you to secure refunds when necessary.
  5. Triple-check transaction details: Follow these essential steps before sending money:
    • Double-check the accuracy of sort codes and account numbers.
    • Scrutinize payment amounts and associated references.
    • Ensure the account holder’s name matches the recipient’s information.
    • Test the process with a modest transaction amount.
    • Verify if any specific requirements apply when dealing with building societies.

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How much time do I have to contact the bank about a misdirected payment?

It’s advisable to reach out within the first two business days of discovering the problem. This window provides the best opportunity to rectify the situation efficiently.

You should contact your bank about a misdirected payment as soon as you notice the issue. Taking immediate action increases the likelihood of a swift resolution.

How long does it take for money to bounce back from the wrong account?

If you want to return funds from a closed account, it can take up to 20 working days.

The transaction will be reversed within seven business days if the recipient agrees to return the money.

However, the time for money to bounce back from the wrong account varies, typically taking a few days to weeks, but it can be longer if there are complexities or disputes.

What happens if you send money to a closed account in the UK?

The transaction will likely fail when you send money to a closed bank account in the UK. The receiving bank will recognize that the account is closed, and the funds won’t be able to be deposited.

In such cases, the money should be returned to the sender, and the transaction will not be completed.

What if the bank is unable to return the money?

If the bank can’t reclaim funds straight away, it should look into it and give you an answer within 15 business days.

Živilė Šarkauskaitė

Živilė is a writer with a diverse background, having worked with tech start-ups and pioneering brands across various industries. Her profound interest in progress and innovation drives her to the field of Fintech, a realm that sparks her curiosity and inspires her to share insights with others.

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