Not enough activity with your account
According to HelpWithMyBank.org (a website run by the federal agency charged with regulating national banks), an account is considered abandoned or unclaimed when there is no customer-initiated activity or contact for a period of three to five years.
What Does a Dormant Account Mean for You? If you ignore your savings bank account and let it become dormant, you'll face limitations. You won't be able to write checks, renew your ATM/debit card, change your address on file, or perform any transactions through ATM, internet banking , or phone banking.
Accounts that have had no transactions for a continuous period of two years or more will be classified as dormant. These accounts are particularly vulnerable to hacking and fraudulent activities. The RBI's decision to close these accounts is intended to protect customers and the integrity of the banking system.
If your account has been inactive for an extended time, it may be classified as a dormant account, restricting you from making payments, withdrawals, or transfers. According to RBI guidelines, a savings or current account is considered inactive or dormant if there have been no transactions for over two years.
Your Account Is Inactive
Your bank could decide to close your account if you haven't been using it enough (or at all). If there have been no debit or check transactions for at least three years, the bank might consider the account abandoned and refer it to your state's unclaimed property program.
These dormant accounts can pose a significant security risk, primarily because they are often overlooked or forgotten, yet still possess access privileges. As a result, they may become vulnerable to unauthorised access or misuse.
A dormant account is not just one that hasn't been used for a while, it's one that has been left without any customer-initiated activity for an extended period. This period can vary significantly depending on the provider, from 12 months for current accounts to up to 15 years for savings accounts.
The financial institution changes the account's status from inactive to dormant. The bank will try to contact the account holder (a problem if the person moved and didn't update their address, or if they died) and allow a certain amount of time for a response.
When an account becomes dormant, it remains open but inactive, and the account holder cannot use certain features like online banking or ATM withdrawals. Banks may have policies to handle dormant accounts, such as charging fees, restricting access, or transferring funds to a separate account.
Banks may close an account due to inactivity, excessive overdraft fees, or suspected fraud.
How long does it take for a bank account to become inactive or dormant? The timeframe varies depending on the bank's policies, but typically an account becomes inactive after 12 to 24 months of no customer-initiated transactions. Dormancy usually sets in after a longer period, often exceeding two to five years.
Generally, an abandoned account is one for which there has been no customer-initiated activity or contact for a period of three to five years. States' abandoned-property programs require banks to turn over the funds of such bank accounts to the custody of the state treasurer.
The Savings Account becomes Inactive or Dormant
For instance, if you haven't carried out any transaction through your Savings Account for more than a year, then it is classified as "Inactive." Similarly, if you do not transact using your Savings Account for more than 24 months, it is classified as a Dormant Account.
As TransUnion and Experian note, a closed account that shows a positive history of payments is likely to help your credit score. Generally, a closed account with negative history can continue to hurt your credit score for seven years.
Depending on the facts of your case, you may be able to sue your bank in small claims court. You may also be able to join a class-action lawsuit against a particular financial services company.
Yes. Generally, banks may close accounts, for any reason and without notice. Some reasons could include inactivity or low usage.
In the long run, your cash loses its value and purchasing power. Another red flag that you have too much cash in your savings account is if you exceed the $250,000 limit set by the Federal Deposit Insurance Corporation (FDIC) — obviously not a concern for the average saver.
A dormant bank account becomes inactive if there are no customer-initiated transactions for more than two years. Reactivating the account is a simplified process that involves re-submitting identification documents. Unclaimed deposits are transferred to the Depositor Education & Awareness Fund overseen by the RBI.
Financial institutions are required by state laws to transfer property (e.g. money) held by inactive accounts, typically to your state's treasury department, if the account has been inactive for a certain period of time.
Use 'My Lost Account' to start a free search
If a bank/building society can't agree on the validity of your claim, you have the right to appeal internally through the bank and then, if still unsuccessful, to refer your complaint to the independent arbiter, the Financial Ombudsman Service (FOS).
Often, if a financial institution receives a request for transfer and doesn't have an account with a matching account number, or the account has been closed, the transfer will be declined. No money will be exchanged. The funds will remain with the sender.
The Takeaway
Banks and credit unions take note of accounts that show no transactions for a long period of time. The dormant account process starts with one year of no activity. After three to five years, depending on your state, ends with your money being turned over to the state.
When you don't use your Google Account within a 2-year period, it's then deemed inactive, and all of its content and data can be deleted. Before this happens, you have the opportunity to take action in your account when Google sends you: Email notifications to your Google Account.
Inactivity (Bank Account Freeze Reason)
Reason: No account activity for over two years, including failure to maintain the minimum balance. Impact: Accounts are treated as dormant or inoperative and frozen. Action: Regularly use the account or reactivate it by following the bank's process.