What Happens to Inactive Bank Accounts
Having a bank account go dormant may be a rare occurrence, but it happens to many banking customers.
Some tend to forget about them. Others simply don’t use them on a regular basis.
Often, a family member dies and passes down a bank account without the heir knowing it.
Whatever the reason may be for an account to fall dormant, nobody wants to see their money disappear.
While the money still technically belongs to the customer, it becomes a hassle to get the money back from the state (where inactive account balances are sent to).
What happens to inactive bank accounts?
If service fees haven't already drained the balance on the account, an inactive bank account is turned over to the state treasury, where the owner must go in order to retrieve their funds.
Where Does the Money Go?
Here's a typical outline of what happens to a dormant bank account:
1. The account is dormant for a specific period of time.
Generally, a time frame of 3 to 5 years with no customer-initiated activity sends an account into dormancy.
Activity that will help to avoid an inactive account usually includes:
- Depositing or withdrawing funds
- Confirming an active account with the bank (may require filling out a form)
- Written correspondence to the bank regarding your account
The amount of time that must lapse depends on the state in which the bank account was opened.
2. An attempt is made to contact the account holder.
Before sending the account to the state, the bank must try to notify the account holder.
If the customer does not respond within a certain amount of time, the balance on the account will be turned over to the state.
3. The bank turns the account over to the state.
In a process that is called “escheating” an account, banks are required to turn over funds from the inactive account to the state treasury.
Once the account is sent to the state, the funds are held as unclaimed property.
To reclaim your money, you will have to contact your state for the instructions on how to get your money back.
You'll need to complete and submit a claim form along with the necessary identification.
If you happen to have unclaimed property held by the state, you can begin the retrieval process by visiting www.unclaimed.org.
Avoid Letting Your Accounts Go Dormant
1. Review your bank accounts regularly.
By doing this, you can identify which accounts to close to becoming officially inactive.
Shift the funds to another account to make it less of a worry. To make this easier, use money management software.
2. Create account activity with automatic transfers and scheduled payments.
With automated transactions, keeping your account active should not be a problem.
You can set up an automatic transfer of a small amount into your savings account or make monthly bill payments from your checking account.
3. Keep your address and contact information updated on your bank accounts.
If you keep your address up-to-date, you'll be less likely to miss the final notification before an account is turned over to the state.
If you allow the state to escheat an account, it could take months or even years to reclaim your funds.
Watch Out for Fees
Depending on the account and the bank, your account may be hit with a dormant account fee.
The dormant account fee is charged after a specific period of time with no customer account activity. Usually, this time period ranges from 6 to 12 months.
The fee is charged for every month that the account is inactive -- until the point where the bank determines that it is time to turn the account over to the state treasury.
What are the dormant account fees charged by the biggest U.S. banks?
Dormant (Inactive) Account Fees
|Bank||Dormant account fee|
|Bank of America||None|
|U.S. Bank||$5 per month (after four consecutive months of inactivity)|
|Capital One||None (escheatment after 24 months of inactivity)|
|PNC Bank||$20 upon escheatment (only applies to Philadelphia accounts)|
|Santander||$50 upon escheatment (after 12 months of inactivity)|
|Fifth Third Bank||$5 per month (after 395 calendar days of inactivity) (only applies to accounts with balances of less than $100)|
|Citizen's Bank||$10 per month (after 12 months of inactivity); $5 per month thereafter (12 months for checking or 24 months for savings; $50 escheatment fee (after 24 months)|
|BMO Harris||None (escheatment after 36 months of inactivity)|