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Help! My bank account is frozen

Find out how to fix it — and stop it from happening again.

Your bank account can be frozen for a number of reasons, but the most common are suspected fraud and unpaid debt. And if it happens while you’re overseas, it could put you in a tough situation. In any case, you’ll need to contact your bank or creditor in order to get your account unlocked.

3 Reasons your account may be frozen

The main reasons why bank accounts can be frozen are unpaid debt and suspected fraud. The steps taken to freeze your account and the process to get it unfrozen will vary based on the reason it was frozen. The 3 main causes of your getting frozen are:

  1. Suspected fraud. This occurs when your bank sees a string of strange activity in your account, like suspicious log in attempts, unprecedented big purchases or transactions occurring in different locations at once. Some banks will notify you if they have to freeze your account, either by a phone call or even text. However, you may find out before they contact you if your debit card gets unexpectedly declined.
  2. Outstanding debt to creditors. A creditor can seek a court order to freeze your account and automatically withdrawal its funds in order to pay an outstanding debt. Even your bank could freeze your account to collect an unpaid debt, like credit card debt, from your account. A creditor would only do that, however, after multiple attempts to communicate with you to settle the outstanding debt.
  3. Outstanding debt to the government. The Canada Revenue Agency (CRA) has the right to freeze your account and withdrawal funds, without a court order, if you owe them money and haven’t arranged payment. Again, they wouldn’t freeze your account without first communicating with you about the issue.
Warning iconKeep in mind that no matter what the cause is, if your bank account is frozen, no money can leave your account. So any automatic withdrawals from your account will likely bounce, and you could be charged NSF fees.

How to unfreeze a frozen bank account in Canada

Whether you’re on home soil or overseas, you’ll need to contact your bank as soon as possible if you need to unfreeze or unlock your bank account. Most banks will require you to call in to verify your identity, as opposed to going online to fix the problem. If you’re overseas, try using Wi-Fi calling or a landline to avoid international roaming charges from your cell phone company.

How to unlock your account when creditors freeze it

The same principle applies here – communicate with your creditors. By contacting them, you’re helping to prove that you intend to pay your debt. You can contact your bank to find out which company has frozen your account. Once you’ve worked out a payment schedule with you’re creditor, it’ll likely unfreeze your account.

In the meantime, you could consider opening up another bank account with a different bank and arranging to have your paycheck deposited there. That way you’ll still have access to your money, even while you sort out your finances with your lender.

Why would my bank suspect fraud?

Banks need to be more vigilant than ever to protect their customers against fraud. As part of this protection, banks have systems in place to monitor customer accounts for any suspicious activity.

Online account log in issues

One common reason a bank may freeze your account is because of errors when you tried to log in to your online banking or mobile app profile. If you’ve used the wrong password too many times, your account may be locked for a few minutes.

In that case, simply wait until you can attempt to log in again, and retry your password. If you continuously enter the wrong password, your account might be locked indefinitely, which would require you to call your bank to get it unlocked.

Your account may also be locked if you enter any incorrect information while attempting to reset your password. Again, you’ll likely need to call your bank directly to sort out any issues.

Transactions in Canada

Cashing bad cheques, making unusual purchases or large deposits and having inaccurate personal information can lead to your account being flagged. Banks also look out for small purchases that are immediately followed by large ones, as thieves often use small purchases to test an account before buying what they want.

Banks also sometimes track fraud by location. For example, let’s say you use a credit card in one city and 1 minute later a debit transaction from your account occurs in a city many miles away. The bank may assume that one of those transactions was unauthorized since you can’t be in two places at once. In that case, your account may be frozen.

Transactions overseas

When your credit or debit card is used to make a purchase in a different country without warning, it can be a sign that it was stolen. To protect your account, your bank may freeze it until you can verify your identity and confirm the card is in your possession.

How can I prevent my account from being frozen due to fraud?

Banks are always on the lookout for suspicious activity, so you should take precautions to avoid having your account frozen by accident.

Protect yourself from fraud at home

Avoid making unusually large deposits or purchases, make sure all cheques you cash are legitimate and keep your personal information up to date.

Additionally, try not to stray too far from your usual spending habits; if you usually spend $10-$20 per day on your debit card, suddenly buying a series of luxury items or shopping in expensive stores could raise suspicion.

Protect yourself from while traveling

To keep your account from being flagged for potential fraud while traveling, let your bank know where and when you plan to travel before you leave. You can do this by calling your bank, visiting a branch or using the online platform or mobile app. However, bank security algorithms are constantly improving to recognize travel transactions, so some banks no longer require you to call in advance. Always be safe and check with your bank to find out what information they require from you.

You can also provide details of the best way for the bank to get in touch with you while overseas. You can log back into Internet banking at any time, even if you’re already overseas, to make changes to your travel plans.

How to prevent your account from being frozen by creditors

Creditors, including the government, just want to know they can get their money back eventually. So if you know you can’t make a payment, then call them immediately to let them know and possibly arrange an alternative payment schedule. They often make provisions for people struggling to make debt repayments, and by communicating, you’re showing them you plan on repaying the debt. Usually, a creditor won’t take steps like freezing your account, if you’re in constant communication with them about your financial situation.

In some cases, you might have to consider filing a consumer proposal or declaring bankruptcy, if you know you won’t be able to repay a debt.

Tips for handling money while traveling

Whether you’re going on an upstate road trip or taking a vacation overseas, here’s how you can easily and affordably handle your money while traveling:

  • Consider a travel money card. A prepaid travel card can help you save money and avoid bringing your debit card. Look for a card that allows you to take advantage of the best exchange rate and also avoid any unnecessary fees.
  • Use cash and cards. Take a combination of cash and cards with you so you can pay for all your purchases. There are some situations overseas where cash will be the only payment option, while cards add extra flexibility and security.
  • Don’t exchange currency at the airport. Airport foreign exchange companies tend to offer poor exchange rates. You’ll get a better deal if you purchase your foreign currency in advance or even when you arrive at your destination.
  • Check card expiration dates. You don’t want to get halfway around the world only to discover that your credit or debit card is about to expire.
  • Watch out for fees. Find out what your bank charges for foreign transaction and ATM fees. If you travel often, consider getting a travel-friendly credit card.

Bottom line

If your account is frozen for any reason, you should immediately call your bank to speak to a customer service representative. In most cases, you’ll be able to verify your identity and get your card unlocked almost instantly. And if you’re not happy with the customer service you’re getting, compare other bank accounts so that you don’t have to deal with this next time.

Frequently asked questions about frozen bank accounts in Canada

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