dormant bank account

When a financial account – including a bank account – sits unused for a period and the owner of the account falls out of contact with the institution holding it, it’s generally considered dormant. Fortunately, there usually isn’t a statute of limitation on a dormant bank account, so you should have a chance to reclaim your cash. If you aren’t sure how to begin, here is a look at how to claim your money from a dormant bank account.

About Dormant Bank Accounts

Before digging into how to claim your money from a dormant bank account, it’s critical to understand when an account is considered dormant. While the exact timeline varies by state law, a bank account usually has to go unused for between three and five years before it’s reclassified as dormant.

In this sense, unused means more than just not withdrawing or depositing funds. The accountholder essentially has to have no customer-initiated contact with the financial institution during that time. That includes calling the bank by phone, logging into an online account, or visiting in person.

It’s important to note that certain automatic activity doesn’t prevent an account from going dormant. For example, interest paid into the account or maintenance fees coming out of an account aren’t customer-initiated activities, so they won’t prevent an account from changing status.

How to Claim Your Money from a Dormant Bank Account

Respond to a Contact Attempt from the Financial Institution

When a bank account goes dormant (or is about to go dormant), the financial institution holding any funds is required to attempt to contact the owner. Usually, this means sending a letter to a last known address. Although, some may also try to call or email using the most recent set of contact information.

The financial institution has to wait a specific amount of time after attempting contact before it can take further action on the account. This gives the account holder time to receive the notification. Then time to take action to reclaim their funds.

If you receive a notice about an unused bank account. There are typically instructions that tell you how to access the funds. However, if they are unclear – or there isn’t direct guidance available in the kind of notice you’ve received . You can reach out to the financial institution. They will let you know what steps you’ll need to take to claim the money directly from the account. Which would suggest it’s still there.

Use the State’s Unclaimed Funds Process to Reclaim the Money

When a bank account goes dormant, the financial institution is typically required to send the money to the state treasury. This is to ensure it doesn’t revert back to the bank. That process is called escheating. It’s used to ensure that the person who owned the account – or the rightful heir, in the event of a death – won’t lose the money.

Once the state receives the funds. It’s considered unclaimed property and is held until it’s properly claimed. Regardless of how long it takes for that to happen, the cash will be there.

If you want to claim the money from the dormant bank account. You’ll need to use the process outlined by the state that is holding the funds. That means you may not be contacting the state where you live if that isn’t the state that received the money from the account.

Thankfully, it’s pretty easy to find the right approach. You can perform a search through the National Association of Unclaimed Property Administrators to find out about unclaimed accounts and the filing processes in every state.

Usually, your first step is to perform an online search using the tool above to identify the account in question. Next, you’ll select the right account and click the claim option. Then, you’ll complete an online form. You’ll also provide any requested identification. That way, the state can confirm that you’re the rightful owner of the money.

Once the state processes and approves your claim – something that can take several weeks or even months.  You’ll usually receive your funds by check. It’ll be mailed to the address provided in your claim form. This way you’ll still get it at your current address even if it doesn’t match the one that was previously associated with the account.

When you get the check, just cash it or deposit it into your current bank account. At that point, the money is yours to do with as you please.

How to Stop a Bank Account from Going Dormant

When a bank account goes dormant, it usually isn’t ideal. Claiming the funds from the state isn’t a fast process.  It can take weeks or months before you receive the funds. Plus, the money isn’t earning interest while in the state’s hands. Meaning you could be missing out on some growth.

Additionally, many bank accounts come with inactivity fees. If the account in question does. It could eat up all of the money well before it’s considered dormant and the escheatment process begins.

As mentioned above, it takes time for a bank account to go dormant. If you want to prevent that from happening, then customer-initiated activities need to occur regularly. One easy way to do that is simply logging into the account online. With that, you don’t have to do anything to the money to have a qualifying activity. However, it isn’t the only option.

Setting up a direct deposit for a paycheck can work. Similarly, sending a bit of money into the account monthly or making a small purchase regularly using a debit card or check can do the trick. ATM withdrawals are considered customer-initiated activities as well. Even having a recurring automatic payment that you create may prevent the account from going dormant because you started it originally.

Update Your Contact Information

Updating your contact information at the bank is a customer-initiated activity, so that alone may prevent the account from going dormant. Plus, it ensures that the financial institution has a way to reach you if the account does become inactive, increasing the odds that you can intervene before the money goes to the state.

Do you have any tips that can help someone get their cash from an unused bank account? Have you been able to successfully claim your money from a dormant bank account and want to discuss your experience to make it easier for others? Share your thoughts in the comments below.

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