Rules for Inactive or Dormant Bank Accounts

A bank account can provide a place to stash some cash for safekeeping while earning interest, but if you forget about your account for too long, your money may not be there when you need it. If a bank account has no activity for an extended period, it can be flagged as inactive or dormant. When an account remains inactive long enough, it can pass into the hands of state governments as unclaimed property.

Banks accounts tend to come with long lists of rules and conditions that can tack on charges for all sorts of services and account activities. Your bank may charge inactivity fees if you don't use your account often enough. The federal government has a ban on inactivity fees for credit cards, but fees can be imposed on other types of accounts like savings, checking and stock-trading accounts.

As of 2013, the Federal Deposit Insurance Corporation insures deposits of up to $250,000 that savers make at participating banks. To protect consumers, the FDIC sets a variety of rules that affect how banks operate. For example, banks are required to pay interest on funds held in an interest-bearing account even if a low level of activity allows the bank to consider the account inactive or dormant.

If you let an account remain inactive for several years, your funds may end up in the hands of your state government. According to the U.S. Treasury Department, bank accounts typically pass to state governments when there is no customer initiated activity or contact for a period of three to five years. Specific rules for unclaimed property vary by state. Banks typically are required to try to contact you to give you chance to claim your cash before handing your account over to the state.

When a state government takes control of an unclaimed bank account, it doesn't use the money to pad its own coffers. It simply holds the cash until the owner claims it. Each state has its own procedures you can use to find unclaimed property. The National Association of Unclaimed Property Administrators offers links to the unclaimed property offices in each state.