What Is a Restricted Bank Account?

A restricted bank account places limits on the account's transactions.

A bank account usually allows instant access for individuals whose names are on the account; they can deposit and withdraw money at any time, with no prior notice. A "restricted" bank account places limitations on the number of deposits, withdrawals and checks written.


The account holder, which can be an individual, company or an organization, can place limitations on an account to help ensure its use is within the holder's guidelines. Banks also have the legal right to impose restrictions on accounts. A court can order restrictions on an account and give detailed instructions regarding an account's permitted activity.


A nonprofit organization may set up a restricted account as a place to hold funds that earmarked for a specified purpose, such as awarding an annual scholarship. The money must be used for that specific purpose. Other restricted accounts can be opened for specific purposes, such as a youth trust account. In this case, the funds are held for a youth until he reaches a specified age, such as 18.

Restricted Access Deposit Accounts

If an individual, business or organization plans to keep a large sum of money sitting in an account for a significant length of time, it is prudent to earn as much interest on the money as possible. Traditional bank accounts that allow "instant access" to your money pay little or no interest. However, some banks offer a new type of account called a restricted access deposit account, which pays a higher interest rate. The bank restricts the number of checks and withdrawals that account holders can complete during a given period.