Closed Account Law and Legal Definition

A closed account means an account to which no further credits and debits can be added. Such account will remain open only for adjustments or setoffs. The statements regarding debits and credits between parties in a closed account cannot be altered. An account can be closed by the customer or custodian by terminating its operation. Sometimes banks may also close an account that is overdrawn for a certain period of time, such as 30 days. Some financial institutions allows customers to reopen their closed accounts while others do not.