If no action is taken, the account is then placed in dormant status. Rules vary from state to state, but in many places an account becomes dormant if the owner does not transact on it for six months or more. After a period of time, they’re required to turn it over to the state. More than half of unclaimed accounts are dormant savings accounts — accounts that have had no activity for three years. Depending on the balance in the dormant account, the remaining funds could all end up going to pay fees. Most state governments require banks to complete annual reports that contain details of inactive or dormant bank accounts. Cash all checks promptly for utility deposits, dividends, insurance premiums, wages and any other refunds you received. The bank may be trying to alert you that your account is inactive. Why bank accounts become inactive/dormant? If your current/savings account does not witness any transaction over a period of 12 months, it gets classified as inactive account. If you have a current or a savings bank account and have not done any transactions through it for more than 12 months, then it will be classified as an inactive account. When money lies dormant in a deposit account or appears to be abandoned, the bank or other organizations with which the money was deposited aren’t necessarily allowed to just keep that money for their own use. 4. ... Before sending the account balance to the state, the bank is usually required to try to contact the customer. When this happens, the host bank will usually begin charging a monthly fee. This practice may also be referred to as What is meant by inoperative or Dormant Bank Account? If your account remains inactive for too long and the bank can’t get in contact with you, the government considers it to be abandoned and takes possession. Choose accounts without inactivity fees, especially for longer-term accounts, such as retirement accounts. Why would a bank send me a notice stating that my account may be turned over to the state treasurer as abandoned property? INACTIVE AND DORMANT ACCOUNT . If the account remains inactive, it may be classified as abandoned, and your funds may be turned over to the state. This is called escheatment. Keep accurate financial records. Make a small deposit or withdrawal every year. Most banks can provide you with a copy of your account agreement and rules if you request one. Some banks send a letter to the last known address of the account holder. Opening, Closing & Inactive Bank Accounts; Inactive Accounts; Share This Page: Glossary. The good news about escheatment is that the government doesn’t take the money and spend it as it pleases. 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