Legal Definitions - closed account

A closed account refers to a financial or credit account that is no longer active and cannot be used for new transactions. This typically occurs when the account holder or the financial institution terminates the account relationship, often after all outstanding balances are settled and any remaining funds are disbursed. While new activity is halted, records of the account's history are usually maintained for a period by the institution for regulatory or record-keeping purposes.

Here are some examples illustrating a closed account:

• Example 1: Personal Checking Account

  After moving to a different state, David decided to close his checking account with his old local bank. He transferred his remaining balance to his new bank account and then formally submitted a request to his previous bank to terminate the account. Once the bank processed his request, his old checking account became a closed account. He can no longer deposit funds into it, write checks from it, or use its associated debit card.

• Example 2: Credit Card Account

  Maria had a credit card that she rarely used. After paying off its small outstanding balance, she contacted the credit card company and requested to cancel the card and close the account. The company confirmed the closure, and now Maria's credit card account is a closed account. She cannot make any new purchases with that card, and the line of credit is no longer available to her.

• Example 3: Business Investment Account

  A startup company, "GreenTech Solutions," had an investment account with a brokerage firm where they held some initial capital. When they secured a larger funding round and decided to consolidate all their investments with a different, larger financial institution, they sold all the securities in their original brokerage account and then instructed the firm to close it. This investment account is now a closed account, meaning GreenTech Solutions can no longer place trades or manage assets through that specific account.