How Long Can a Bank Account Be Inactive?
Learn the lifespan of inactive bank accounts, the stages of dormancy and escheatment, and practical steps to recover your money.
A bank account can become inactive if there is no customer-initiated activity for an extended period. This status can lead to fees and, eventually, the transfer of funds to state unclaimed property divisions. Understanding the process and timeframes involved can help account holders prevent their funds from becoming inaccessible or lost.
Understanding Account Inactivity
Account activity refers to any transaction initiated by the account holder. This includes actions like making deposits, initiating withdrawals, online transfers, paying bills directly, contacting the bank, or logging into online banking. Automated transactions, like interest accruals, typically do not prevent an account from being classified as inactive.
Banks generally classify an account as “inactive” after a period ranging from six months to two years without customer-initiated activity. This initial timeframe can vary significantly depending on the specific financial institution and the type of account held. For example, some banks might mark an account inactive after 12 months, while others may extend this period to 24 months.
Bank Handling of Dormant Accounts
Once a bank account is classified as inactive, it may eventually transition to a “dormant” status if inactivity continues. After an account becomes dormant, banks typically apply service fees, also known as dormancy or inactivity fees.
These fees can range from $5 to $25 per month, and their application aims to cover the administrative costs. Banks are generally required to attempt to contact the account holder before and during the dormant period. Communication efforts often involve sending notices via mail to the last known address, or through email and phone calls, to prompt activity or a response from the owner.
State Unclaimed Property Laws
If a bank account remains dormant for an extended period, the funds are eventually turned over to the state through a legal process known as escheatment. This process is a requirement for financial institutions, ensuring that abandoned assets are safeguarded. States do not claim ownership of these funds but act as custodians, holding the money until the rightful owner or their heirs can claim it.
The timeframe for escheatment typically ranges from three to five years of inactivity, though this period can vary by state and property type. For instance, some states may require escheatment after three years, while others, like Delaware, Georgia, and Wisconsin, may set the period at five years. Even after funds are escheated, the right to reclaim the money from the state generally remains indefinitely.
Recovering Your Funds
Individuals can reclaim escheated funds through official state unclaimed property programs. The primary method for searching is through state treasury or controller websites, or a consolidated national database like MissingMoney.com. MissingMoney.com is endorsed by the National Association of Unclaimed Property Administrators (NAUPA) and allows free searches across participating states.
To claim funds, individuals usually need to provide specific information. This often includes their name, last known address, and proof of identity such as a government-issued ID and Social Security Number. Additional documentation may be required to prove ownership of the property, such as old bank statements. Once a claim is submitted, the state will review the documentation and, if approved, return the funds to the rightful owner.