Shutdown
I recently wrote a post about a bank shutdown linked to manufactured spending (MS). It was my first checking deposit related bank shutdown from MS, but probably not the last. The TCF Bank checking account in question was set to be closed on July 31. I preemptively closed the account the day before, so that a check for the few hundreds of dollars of remaining funds didn’t have to be sent out in the mail. However, an odd thing happened after closing the account.
A few days after the closure, I tried logging into my old checking account online just to see if it was possible and also to make sure that everything was ok. The login succeeded, but there was money in the account. Seeing money in the account was bizarre, because I had literally walked out of a local branch with the remaining funds a few days before that. Now there was nearly $10,000 back in the account! Unfortunately seeing unplanned money was largely not a welcome sight.
Bounced
The issue that arose from the closed checking account was that several days before shutdown, I paid a couple of credit card bills from it. Before closing the account, I looked at online to see if funds were sent and received by both TCF Bank and the credit card companies. It looked like everything had gone through on both sides without issue, and I therefore felt comfortable closing the account. Soon after closing though, there were problems.
Even though the payments from my TCF checking account seemed to have been paid (as indicated by a credit entry on my recent transactions list), the money never actually got all the way to the credit card companies. It can take up to 7-10 days for a bank to actually receive the funds from an external checking account payment, and in this case, my account was closed before the money was actually transferred out. After seeing money back in my “closed” checking account, I realized what had happened and paid the balances of both credit cards off from another external account. The following day both credit cards cards were left with a $0 balance. Even though both cards now had zero balances, they still had issues.
Sting
As a result of the bounced payments, my Fidelity 2% cash back card incurred a $25 fee and my available credit was slowed to a 10 day cycle. After a call with that bank today, they told me that the credit would free up after they received my last payment from a few days ago. Put another way, my account should go back to normal in roughly a week or so. That seems highly optimistic, but I’m hopeful that it will happen.
The penalties with my PenFed 2% cash back card were worse. Even though this card also now has a $0 balance, but my available credit was also slowed to a 10 day cycle. When I asked how long that cycle would remain in place, I was told “for the next 6 months”. Apparently the credit slow roll is hardwired into the system too, and can’t be undone by a human. So basically I’ll be able to use that card just 3 times a month for the next 6 months. Not exactly good news.
Conclusion
Having a credit card payment bounce back is threat for those who manufactured spend, because it can put eyes on your account, and because it can slow how the rate at which credit is available. The moral of the story is to make sure that a bank account closing, from a shutdown or not, won’t affect any of your credit card relationships. If it does, you might incur fees, get eyes on your account, have available credit slowed, and even shutdown if the issue takes the wrong path.
