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What Can You Do With A Frozen Bank Account?

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frozen bank account

Learning that your bank account is frozen is usually a shock. While you have some access to your account, a lot of your activity is restricted. This can make it incredibly challenging to manage financially, particularly if your only bank account is frozen. If you’re stuck with a frozen bank account, knowing what you can and can’t do is beneficial. Here’s a look at how a frozen bank account works.

What You Can Do When Your Bank Account is Frozen

If your bank account is frozen, there are still certain things you can do with the account. You do maintain your ability to review your transactions. Additionally, the account can accept certain kinds of deposits. However, that is the limit as to what you can do while the bank account is frozen.

What You Can’t Do When Your Account is Frozen

Once your bank account is frozen, you can’t withdraw any of your money. Additionally, you can’t transfer out any of the funds, even if it is for paying bills.

Until the account is unfrozen, your money is essentially locked away. You’ll have to address the source issue if you want to regain access to your funds.

How to Handle a Frozen Bank Account

The moment you realize your bank account is frozen, you need to call your bank. There are a few reasons why it may have frozen your account, and you can’t take action until you know which scenario is in play.

Usually, banks only freeze bank accounts for three reasons:

  • Illegal or suspicious activity
  • Unpaid debts and the creditors have court orders
  • Unpaid debts to the government

Your next steps may be determined based on the reason for the freeze. For example, if there is an unpaid debt that went to collections and that creditor is trying to access your account to collect payment, you may be able to speak with the creditor and come up with another arrangement.

However, in nearly all cases, it is wise to consult with a lawyer. Getting a bank account unfrozen can be incredibly complicated since it usually means that criminal activity is suspected, you are fighting against a court order, or you owe the government money.

Keep An Eye On Your Mail

As you work to figure out your next steps, keep an eye on your mail. Usually, you’ll be receiving a notice that will discuss whether any of the money in your account is “exempt” from the freeze. Additionally, it should contain instructions regarding what you may need to do to get the account unfrozen. By reviewing it carefully, you may be able to start a procedure that could resolve the issue with or without the help of a lawyer.

You should also review local laws and regulations regarding frozen bank accounts. In some cases, there are legal requirements regarding how much of your money has to remain unfrozen, ensuring you can handle various necessities of life. For example, the Exempt Income Protection Act in New York is one such law. Not all states have the same regulations, so you’ll need to research yours to determine what protections are available.

Should You Open Another Bank Account?

If your main bank account is frozen, opening a new account at a different bank is usually a good idea. This allows you to handle various financial basics, like deposit paychecks and pay bills. This is especially true if your pay is being direct deposited into the frozen account, as you’ll need a new place for that money to go. Similarly, if you are receiving government benefits like Social Security, you might need a new bank account, so you can have that money deposited into a usable account.

 

Have you ever had to deal with a frozen bank account? What were you able to do with it? Share your experience in the comments below.

 

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Opening Two Bank Accounts from the Same Bank

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Having multiple bank accounts can be a great financial move. It gives you options for controlling or segmenting your spending, saving toward multiple goals and keeping those amounts separate, and keeping both a joint and individual account for managing household finances. Luckily, nearly every bank will let you open two bank accounts. Not only can you set them both up when you first sign up, but you can also add a secondary account later. However, there are also risks if you use this approach. If you are considering opening two bank accounts from the same bank, here’s what you need to know.

Benefits of Opening Two Bank Accounts from the Same Bank

When you have more than one account with the same bank, you get a variety of benefits. First and foremost, it is incredibly convenient. All of your money is in one place, so you’ll have one bank to deal with if you need help.

Plus, your transfers between accounts may be instantaneous, which can be helpful. For example, if your checking account is low and you have money in savings, you can shift money from your savings to your checking to handle an unexpected emergency. Potentially, the cash will move in seconds, which is great if you can’t afford to wait.

If you are considering two savings accounts, you could use each one for a different purpose. For example, one could hold your emergency fund while the other is used to build up cash for a major purchase or vacation. This can make it easier to track the purpose of your money, which is great for budgeting, too.

Risks of Keeping All of Your Money with One Financial Institution

When you have multiple accounts with one bank and don’t maintain a checking or savings account with another institution, there are some potential risks. If your bank experiences a technical issue, you might not be able to view or use any of your accounts, and that could put you in a bind. While this would certainly be a rare occurrence, it’s important to understand that it could happen.

If you have a substantial amount of money, you may also exceed the insurance limits. At banks, the Federal Deposit Insurance Corporation (FDIC) insures each account holder for up to $250,000, not each account. That means, if the total of your two accounts is above $250,000 together, you aren’t fully insured. The excess wouldn’t be covered, so you could lose it if an incident occurred.

No More Than $250K

However, if you put those two accounts in separate banks, as long as each bank holds no more than $250,000, your money is fully insured. As a result, you would be safer using more than one institution if your total savings and checking account balances would exceed that amount.

Ultimately, whether you open two accounts with the same bank or separate them by using more than one bank is a personal decision. Just make sure you are comfortable with the risks if you proceed.

 

Have you opened two bank accounts at the same bank? Tell us about your experience in the comments below.

 

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Best Offshore Bank Accounts and Why You Need One

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I confess that for a long time I never would have thought about the best offshore bank accounts. I had a mistaken image that these accounts were for super-rich people who wanted to hide their money. In fact, I figured that most of them were criminals in the vein of an American Greed episode. However, now that I’ve learned more about what offshore banking really is, I understand that anyone can benefit from using these types of bank accounts. That’s how I’ve come to wonder about which ones are the best offshore bank accounts.

What Are Offshore Bank Accounts?

As you likely know, offshore bank accounts are bank accounts that are established in a country other than the one where you reside. More specifically, it’s an account at a bank that operates under an international banking license. Many people who live in the United States do opt to open offshore banking accounts around the world.

Benefits of Offshore Banking

There are many different reasons that people choose offshore banking. Here are some of the most common benefits people seek when choosing this option:

Protect Your Money

Nomad Capitalist reports that there are 39 countries that offer safer bank accounts than the United States does. If something goes awry here politically and/or economically, your money could be at risk. Theoretically, it’s protected, of course, if it’s FDIC insured. Nevertheless, you don’t want to be caught with your pants down when it comes to large sums of money. Putting some of your money in offshore bank accounts can help protect you from problems with the government and/or the American banks that you use.

Diversify Your Accounts and Your Currency

You don’t want to put all of your money in one account. In fact, you shouldn’t even keep all of your money in one currency. By saving your funds in multiple currencies, you protect yourself against a variety of changes in the global economy. The best offshore bank accounts offer the opportunity to utilize several different currencies and to easily transfer funds from one currency to another.

Earn More Interest

The best offshore bank accounts also offer very high-interest rates on your savings. Therefore, if you want to maximize the money that you earn in interest, you should explore your offshore options. Make sure that you do your research and understand all fees as you work to make the most of your money.

More Reasons You Need an Offshore Bank Account

International Man suggests these additional benefits:

  • It gives you financial freedom compared to tethering yourself to one country’s banking system.
  • It can give you access to medical care abroad just in case you need it.
  • Generally speaking, it helps with banking as an expat/tourist.
  • Acting now can help you make the most of your money in the future.

Of course, you want to keep your regular American bank accounts. But if you have extra money besides what you need in your immediate checking and savings account, then you might want to think about looking into the best offshore bank accounts.

Where Are the Best Offshore Bank Accounts?

You can open an offshore bank account almost anywhere. However, each country has its own rules when it comes to banking. Moreover, the United States has its own banking rules that you must understand if you engage in offshore banking. Depending on your specific needs, certain countries will offer better options than others. That said, some of the best offshore bank accounts are located in:

  • Belize, which has high-interest rates and 24 percent required liquidity; note that this one is controversial because of a poor reputation and should be considered carefully, weighing all pros and cons
  • Georgia, which Nomad Capitalist says is the easiest place to bank in and has good interest rates
  • Germany, which is widely recognized as one of the safest banking systems in the world
  • Hong Kong, which Sovereign Man ranks number one
  • Singapore, which has monetary stability and top financial advisors at their banks
  • South Korea, which has good business banking options
  • Switzerland, which leads the way in financial privacy
  • UAE, which is emerging as a strong new market for offshore banking

Generally speaking, the best offshore bank accounts are located in areas that are financially stable, don’t face a lot of US pressure for compliance, and have laws that are pro-business. Note that some countries (such as Sweden and France) have very safe banks but also have some drawbacks such as very high taxes.

What Are the Best Offshore Bank Accounts?

The best offshore bank accounts are located in countries where they are required to keep a lot of cash on hand (which isn’t the case with the United States, by the way). You want to choose a bank that offers good customer service, is relatively easy to bank with as a foreigner, and has terms you like (such as a high-interest rate.)

Here are some of the best offshore bank accounts to consider in 2019.

 

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What Bank Account Should I Use?

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What Bank Account Should I Use

Choosing a bank account can be a difficult decision. Whether you are opening a checking account for the first time or this is a second account, it can be a little nerve wrecking. There are certain things everyone should be looking for in a bank account when they go to open a new one, but sometimes you get too flustered with the start-up process.

You may have a lot of questions, you may wonder if this account is the right one for you. What, if any, fees will you incur when opening the new account? Can you afford the initial “start-up” if they have minimums? Here are a few things to keep in mind when opening a new bank account:

No Monthly Fees

Scout a banking account that does not have a monthly fee. Some banks charge their customers as much as $10 a month just to keep their accounts up and running. Some accounts allow their users to avoid these fees if they keep a certain amount across all of their accounts held with the company (checking, savings, retirement, etc.). However, it is important to have your money in separate accounts (at separate banks) for a few reasons. If your bank is hacked, you could lose everything. Also, having your savings at a separate bank removes some of the temptation to spend.

No Limitations

Be sure there is no limit to the number of transactions that you can have each month. Some accounts will only allow a certain amount, so at Christmas time, your debit card could stop working because you’ve reached your transaction limit (but it is only Dec. 10). You should also be sure that you are able to withdraw and deposit money freely into your accounts as well as transfer between savings and checking without incurring fees.

Online and Mobile Access

Having online AND mobile access has become increasingly important when searching for the right bank account. Being able to access your account information on-the-go is a must in this fast-paced world. While most accounts offer this, there are some smaller, private banks that do not, so be sure if this is important to you, that the account is accessible on-the-go.

Overdraft Protection

While over drafting in any account is not recommended, you will not incur any fees by simply keeping a healthy account balance and keeping an eye on your expenses. However, linking your checking and savings account may also prevent overdraft fees. If you link the two and your checking account does not have enough for a transaction, the bank will transfer money from savings to checking. Typically, there is a charge for this, but it is much less than the $35 you will incur for overdraft.

If you are living paycheck to paycheck, overdraft protection may be a good idea. If there is no money in your savings, overdraft protection can help. However, be sure if you opt for the protection that the fees are low and that you will not incur more fees than you would if you just went without the protection altogether.

There are a lot of things to think about when opening a new account, but thinking ahead and knowing what questions to ask is half the battle. By knowing what to look for, you can find the perfect account.

Photo: Flickr: GotCredit

Should I Have Two Bank Accounts?

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Two Bank Accounts

With Anonymous on the lose in the hacking world and ISIS on the rise, many people are concerned about their bank account and private information. Is there any way to really keep yourself safe with all of this going on? Well, there is one way to be sure that you still have access to your money is a major bank is hacked: get a second account elsewhere.

If a major bank were to fall victim to a cyber attack by any group, it could absolutely cripple its every day affairs, leading you to be without access to your money if you do not have a Plan B. Almost half of the major financial firms throughout the world feel that this is a significant threat. Firms have been urged to up their security when it comes to cyber attacks and many of them have been viewing these attacks as a strategic priority. However, it may also mean some prepping on the consumers part as well.

How Many Bank Accounts Do You Have?

You should have two. When most people answer the question, “How many bank accounts do you have?,” most people would answer just one. However, with cyber attacks on the rise, it is extremely important to have a second account in case of a hack. This way, you still have access to some money.

To get the most out of a second account, be sure to keep money in the account regularly, and possibly even set up a bill pay from your other account so that if a cyber attack was to happen, you can still freely use your money.

This approach is similar to the old adage, “Never have all of your eggs in one basket.” If you wouldn’t put all of your money into one stock, you certainly shouldn’t put all of your money in the same bank account, not this day and age. Having a secondary bank account has been a wise thing to do for years, so if you don’t already have one, you should.

Opening a New Account

Opening a new bank account is fairly easy, and most banks allow you to do so online. It won’t likely take much of your time, and it will better secure your finances in case of an emergency, like a hack.

The cyber attack threat to major banks has been getting some attention from the government, and has been for years. Consumers should be treating the threat with the same attention and seriousness and preparing themselves, and their finances, for what could happen.

Keeping Yourself Safe

You should never:

  • Open emails from someone you don’t know
  • Open spammy-looking emails
  • Visit sites with pop-up ads

You should:

  • Update your pop-up blocker
  • Make sure your anti-virus is up-to-date
  • Change your passwords every three months
  • Make sure you never login to your private accounts on public computers
  • Limit your use of public WiFi (when checking bank info)

Cyber attacks are on the rise. Recent companies like TalkTalk and Vtech had their customers’ information compromised. High profile attacks such as these bring attention to the fact that a major bank hack is definitely a possibility, and both financial firms and their customers need to prepare themselves for the worse.

10 Advantages of Using Multiple Financial Institutions

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I have several acquaintances that do all of their banking with one institution. (Typically it’s the bank that holds their mortgage or where they have a large investment account like an IRA or 401K.) They use that one bank for everything from paying the bills to loans to retirement savings. In some cases, they don’t even have multiple accounts or types of accounts at that one bank. They just have all their funds lumped into one big “checking account.”

Certainly it’s convenient, but keeping all of your money at one institution carries many risks. If a single things goes wrong with that one bank or one account, you could face financial hardships while everything is straightened out. Here are some of the advantages you gain when you spread your assets around.

Easier To Recover From Theft

If you have all of your money in one account at one bank, a hacker can wipe you out. While the money will probably be replaced, it takes time. While you’re waiting you won’t be able to pay bills or buy anything unless you use a credit card, and anything you have set up to auto-pay will bounce. You might be able to get the fees reimbursed, but that’s even more hassle. If you have money in a couple of places, you’ll have access to cash while the other problem is straightened out.

You Have More Freedom

If your main bank suddenly raises fees, drops interest rates, or changes its policies, it’s nice to be able to quickly move your business elsewhere. If you already have an account somewhere else, it’s a simple matter to transfer your funds. If you don’t have somewhere else to go, you need to do your research and go through the process of opening and setting up an account. That can mean you’re at the mercy of bad policies or rates for a longer time. Using multiple banks means that one bank cannot hold your money hostage.

Institutional Strengths

You can take advantage of each institutions’ strengths. As with any consumer product, some banks are better at some things than others. Some banks are just not good at handling investments. They don’t have a variety of funds to choose from or experienced advisors to help you. If you have a lot of investments, you may be better off dealing with a dedicated brokerage firm than with your local main street bank. Similarly, some investment firms do not make good checking account or credit card providers. Figure out your needs and then find the institutions that are the best match for those needs. It’s likely that you won’t be able to find a single institution that can meet every need that you have.

FDIC Protection

FDIC protection only covers the first $250,000 per depositor, per institution. (FDIC protection does not extend to investment accounts, only cash deposit accounts like savings or checking.) If you have more than that, you need to open another account at another bank to ensure that your money is protected if the bank goes under.

Protection From Overspending

Some people have difficulty not spending money if it’s in their main account. They think that if it’s there it’s fair game, forgetting (or choosing to ignore) things like emergency funds, retirement, and bills to be paid. If you keep the money you need to save in another account at a less convenient or online-only bank, you may find that you can better resist the urge to spend because the money is harder to access.

To Preserve Credit Union Access

When I first started out, my parents got me into the credit union that they used. Even though I no longer have any affiliation with the group that runs the credit union, I’m grandfathered in. I no longer use the credit union as my primary bank, but I do keep some money in there so that I retain my membership. If I completely closed the account, I would not be able to get back in and they are very useful for certain financial products such as loans and mortgages, if the need arises. If you have access to a credit union but want to switch banks, it may be wise to at least keep your accounts open there so that if you need the credit union in the future, you’re already in.

It Can Make Budgeting Easier

If you have your daily spending money in one account, the money you need for utilities and rent/mortgage in another, and your savings in yet another account, it can make it easier for you to budget. Instead of trying to figure out how much money you need to mentally set aside for each goal or payment, it’s all already separated for you. Some people find this complex, but others find it helpful to keep everything physically separate.

Protection Against Bank Failures

While it’s unlikely your bank will fail, the mess of 2008 taught us that nothing should be taken for granted. Even if the bank shuts down only temporarily, it can leave you stranded if you don’t have another source of cash.

Protection Against Screw-Ups & Accidents

Sometimes things go horribly wrong with banking. Someone enters the wrong account number and your account is erroneously charged. The ATM machine eats your card on Friday night, meaning you can’t get money for the rest of the weekend. If you have another source of cash, you’re not totally adrift while the bank sorts out the mess. If this is your only bank and only account, you’re out of luck until they fix it.

It Can Make Travel Easier

If you travel frequently but you only have your money in a local bank or credit union, you may have trouble getting cash on the road, or you may have to pay a lot of fees to do so. In this case it may make sense to keep at least some of your money with a nationwide/worldwide institution so that you can get money when and where you need it.

One thing to note: If you’re going to open accounts at multiple institutions, make certain that you are not drowning in fees. Search for free checking accounts or use online accounts. Make certain that you can deposit enough with each institution to cover minimum deposit requirements. If splitting up your assets means that you will be paying too much in commissions and fees, it might be better to consolidate with one or two banks. While there are advantages to keeping things in multiple places, it doesn’t make sense to spread yourself so thin that you have to pay fees with every bank. Do the math and figure out what will work for you.

You don’t have to have ten or fifteen accounts, but it can make sense to have at least a checking account, a savings account, and a brokerage account at different institutions. That way, you can move some money in or out of one if it becomes necessary. Putting all of your eggs in the one proverbial basket can lead to problems.

(Photo courtesy of Chase Lindberg Photography)