Don’t worry. This happens.
Really. Sending money to a closed account is more common than you think. The same goes for trying to receive money at an account that has been closed (hello, missing tax refund). These mistakes happen often enough that banks, apps, card servicers—pretty much any institution that might send or receive a money transfer—have protocols for how to handle misdirected funds.
What happens to money that has been sent to a closed account
Misdirected funds don’t disappear. Whether you’re the one who sent money to a closed account or are trying to receive money at an account that has been closed, the following is what might happen next:
The transfer may be declined or returned
This is the most likely scenario when money is sent to a closed checking or savings account.
Often, if a financial institution receives a request for transfer and doesn’t have an account with a matching account number, or the account has been closed, the transfer will be declined. No money will be exchanged. The funds will remain with the sender.
If the transfer already took place and an account can’t be found, the bank will likely send the transfer back the same way it arrived.
How long does it take for money to be returned after it is declined by a bank because of an account closure? Each bank has its own policy, but the wait is typically between five and ten business days until funds are returned.
The bank may issue a check for the transfer
Instead of declining or returning a transfer, some banks may issue a check to the account holder for the misdirected funds. This check will likely be sent to the mailing address on file for the account holder.
Sometimes the issuing party or institution will be the one to issue the check. For example, if you receive your paycheck via direct deposit but you closed the account on file with your employer, your employer may issue a paper check to you after the deposit is declined or returned.
The bank may reopen the account or hold the transfer
Some banks respond to misdirected funds by reopening a closed account. This is more likely if the account closure was recent and is a safeguard to help account holders correct situations like these. If you’re the transfer recipient and this is the first time you have experienced this issue, the bank may work with you to ensure you receive your funds.
Sometimes the account holder isn’t the one who closes the account—it’s the bank. This may happen when the account hasn’t been used and is considered dormant or abandoned, or because the account is frozen due to unpaid overdraft fees or a court order. In these cases, it can be more difficult to access the money that was sent to the closed bank account, but not impossible. The account holder will have to work with the bank to figure out next steps.
Tips for avoiding a misdirected payment
Lost or misdirected money delays scheduled payments and disrupts day-to-day life. Avoid money being sent to a closed account by sticking to these basic tips:
When receiving funds:
- Re-confirm sender’s account information before they initiate the transfer.
- Prior to closing an account, make a list of all people or institutions that send you money (or that you pay) and update your account information with them.
When sending money:
- If you’re sending money directly to a bank account, ensure you have the correct account and routing numbers. Don’t rely on autosaved info—reconfirm with the bank or recipient that you’re sending to.
- Using a money transfer app? Make sure you have the correct account name, email address, and phone number for your recipient.
- Consider sending a smaller amount as a test when sending for the first time.
Some services, like Western Union, allow you to track your transfer to avoid these potential problems. If you transfer money through Western Union and your recipient hasn’t collected their sum, for example, you may be able to stop payment. If a refund is approved, it will be credited back to the card you used in approximately one to two weeks.
Western Union makes transferring money simple. You can send and receive cash with confidence by using our services online, in person, or on our mobile app. If you have questions about sending money transfers, check out these frequently asked questions before you get started.