Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Account Hold

What it is:

Also called an account freeze, an account hold occurs when a bank or other financial institution prevents any transactions from hitting an account.

How it works (Example):

For example, let's say John Doe is selling drugs for a living. He regularly deposits his money into a checking account at Bank XYZ.

The cops eventually discover that John Doe is a drug dealer. They arrest him and place a hold on his account, which prevents him from accessing any of the money he made dealing. It also prevents him from paying his bills.

Why it Matters:

The government, regulators and even creditors or courts can place account holds for various reasons. A hold is not always permanent; the appropriate documentation can lift the hold. Brokerage and investment accounts are also subject to account holds, and it is possible to put a hold on your own accounts.
 

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