Dormant Accounts - What Are They and What to Do About Them
Have you ever wondered what happens if you don’t use your bank account for over a year? In the banking industry, it’s considered a “Dormant” account. In this blog post, we will look at what constitutes a dormant account, how to prevent your accounts from going dormant and what to do if it has become dormant.
What are Dormant Accounts?
To put it simply, any financial account that has not had activity — such as deposits, transfers, or withdrawals — for a specific period of time. Interest earned and deposited to the account is not considered account activity since it is performed by the financial institution, and not by the account owner.
How Dormant Accounts Work
The steps required to put an account in dormant status is a lengthy and gradual process. For bank accounts, the process roughly follows these steps although exact time frames and policies may vary:
- The account owner does not perform any transactions such as deposits, withdrawals, transfers, or inquiries for a period of 12 months or longer.
- The financial institute flags your account as inactive and in some cases may start charging an inactivity fee.
- The financial institute sends notices to you about your account status. After notification, or attempted notification, you have 24 months to start using the account to bring it out of inactive status.
- Finally, your financial institute changes your account status from inactive to dormant.
- Once the account is classified as dormant, the account is closed and any funds remaining in the account are sent to the state.
- Depending on your state, commonwealth, or territory, these funds will go to either go to the Office of the Treasury or the Department of Revenue.
- Remember, Financial institutions are required by state laws to transfer resources held in dormant accounts to the state's treasury after the accounts have been dormant for a certain period of time.
What Happens to the Funds in a Dormant Account
Rest assured that the state will make use of the funds from dormant accounts. The state will typically use these funds for road repairs, public schools, prisons, and other public projects.
These dormant account funds are tracked as debt on the state’s balance sheet. This allows the state to rightfully repay those funds to the owner or beneficiary if and when they show up to claim the money.
How to Claim your Escheated Funds.
If you think you may have some escheated funds, you can follow these simple steps to reclaim what is rightfully yours. Bear in mind, this process could take weeks or months to complete, so be patient.
- Search for your unclaimed funds through a national database such as the National Association of Unclaimed Property Administrators or through a third-party source such as MissingMoney.com.
- Follow the instructions to claim any funds that you may have available.
- Submit the required documentation for verification. This may include a copy of your social security card, drivers license, or proof of residency.
- Pay any processing fees that may apply.
- Once completed, the state will send you your funds.
Keeping Your Account from Going Dormant
Keeping your accounts from going dormant requires that you keep in touch with your financial institution or perform some type of activity, no matter how trivial that action may be. Here is a list of simple steps you can take to keep your accounts from going dormant.
- Make any transaction on a regular basis. Even if it’s just pulling out or depositing $5.
- Update your contact info either online or in-person.
- Login to the account portal and do some trivial act such as getting an account balance.
- Contact your financial institution via email, phone, live chat or visiting them in person.
Final Thoughts
Letting your accounts go dormant can be a costly mistake. Although the cost is usually minimum, it’s still taking money out of your pocket, and you will spend a great deal of time and effort to reclaim the funds.
Disclaimer: The information posted on blogs and vlogs by Fort Sill National Bank is for educational and entertainment purposes only and is not intended as a substitute for professional or legal advice. Fort Sill National Bank will not be held liable for any loss or damage of any kind in connection with this blog.