If you have a savings account you rarely touch, an old checking account you forgot about or a prepaid card sitting in a drawer, you might eventually see a dormant account fee or inactivity fee. Some banks charge these when an account goes unused for a long period. Even worse, if an account stays inactive for years, the money may be transferred to your state as unclaimed property. This guide explains what a dormant account fee is, how dormancy works, typical fees, what happens to abandoned money and simple ways to avoid inactivity charges.
What is a dormant account fee?
A dormant account fee is a charge a bank or financial institution applies when an account has had no customer-initiated activity for a set period. It may be called an inactivity fee, dormancy fee or inactive account fee.
Banks charge these fees partly to cover the cost of maintaining accounts and partly to encourage customers to either use or close unused accounts. Not all banks charge dormant account fees, and some states restrict them.
When does an account become dormant?
Each bank sets its own rules, but common patterns are:
| Inactivity period | What may happen |
|---|---|
| 6 to 12 months | Account labeled inactive; some banks start charging fees |
| 12 to 24 months | Account labeled dormant; restrictions or fees may increase |
| 3 to 5 years (varies by state) | Funds may be reported and transferred to the state as unclaimed property |
“Activity” usually means a transaction you initiate, such as a deposit, withdrawal, transfer or purchase. Interest payments and bank fees usually do not count. Some banks count logging in to online banking or contacting customer service as activity, but many do not.
How much is a dormant account fee?
Fees vary widely. Some banks charge nothing. Others charge a monthly fee, often a few dollars to around $10 or more, after a period of inactivity. Over time, fees can eat into small balances or even reduce them to zero, after which some banks close the account. Check your account agreement or fee schedule for specifics.
What is escheatment?
When an account remains inactive for a period defined by state law, the bank must try to contact you. If it cannot reach you, it must report and transfer the money to your state’s unclaimed property office. This process is called escheatment.
The money is not lost. States hold unclaimed property indefinitely, and you can claim it later, usually for free. You can search state unclaimed property databases, and many states participate in a national search site run by the National Association of Unclaimed Property Administrators.
Types of accounts that can go dormant
- Checking and savings accounts
- Certificates of deposit after maturity
- Prepaid and gift cards (subject to federal and state rules)
- Brokerage accounts
- Uncashed checks, such as refunds or payroll
- Safe deposit box contents
- Insurance payouts and utility deposits
How to avoid dormant account fees
- Make a small transaction regularly, such as transferring $5 between accounts every few months.
- Set up an automatic transfer or small direct deposit.
- Log in and check statements, and update your contact information.
- Respond to bank letters or emails about inactivity.
- Close accounts you no longer need and move money to an active account.
- Consolidate accounts to reduce how many you have to monitor.
- Choose banks with no inactivity fees.
How dormant account fees appear on statements
You may see entries like “INACTIVITY FEE,” “DORMANT ACCT FEE,” “MAINTENANCE FEE INACTIVE” or a generic “SERVICE CHARGE.” Because some fees are labeled vaguely, compare entries to your fee schedule. If you are unsure, see what MISC DEBIT means and how to read a bank statement.
Can you get a dormant account fee refunded?
Sometimes. Call your bank, explain that you were unaware of the inactivity and ask whether the fee can be waived, especially if you plan to start using the account again or keep a balance there. Banks often waive fees for long-time customers.
Real examples
The forgotten savings. Laura opened a savings account in college and forgot about it. Years later she found it had been charged inactivity fees, and part of the balance was gone. She asked the bank for a refund and closed the account.
The escheated account. David moved and stopped using his old checking account. Five years later, he searched his state’s unclaimed property database and found the balance had been transferred to the state. He filed a claim and received the money.
The automatic transfer. Priya keeps a second savings account for travel. She set up a monthly $10 transfer, so it never becomes dormant.
Frequently asked questions
What is a dormant account fee?
A fee banks charge when an account has no customer activity for a certain period.
How long before a bank account becomes dormant?
Often 12 to 24 months, but it varies by bank and state.
Does interest count as activity?
Usually not. Activity typically means a transaction you initiate.
What happens to money in a dormant account?
After a state-defined period, banks must transfer it to the state as unclaimed property, which you can still claim.
How do I find unclaimed money?
Search your state’s unclaimed property website or multi-state search tools.
How to claim unclaimed money from the state
If your account was transferred to the state, reclaiming it is usually straightforward:
- Search the official unclaimed property website for every state where you have lived or worked. Look for sites ending in .gov or the multi-state search tool affiliated with the National Association of Unclaimed Property Administrators.
- Search under name variations, including maiden names, nicknames and misspellings.
- Select the property that matches you and start a claim.
- Provide proof of identity and address, such as a driver’s license and a document showing your old address.
- Submit the claim and wait for processing, which can take weeks to a few months.
Claiming is typically free. Be cautious of “finder” companies that charge a percentage to recover money you could claim yourself. Some may be legitimate, but you rarely need them for simple claims.
Dormant accounts and identity theft
Inactive accounts can be attractive to criminals, because owners are less likely to notice unusual activity. Someone who obtains your old account details may try to make withdrawals or use the account to move stolen funds. Protect yourself by closing accounts you no longer use, keeping contact information current with banks and reviewing statements for any account you keep open, even if it is rarely used.
Prepaid and gift cards
Federal rules limit when dormancy or inactivity fees can be charged on many gift cards. Under the Credit CARD Act, inactivity fees on many gift cards generally cannot be charged unless the card has been inactive for at least 12 months, and only one fee per month may be charged, with clear disclosure. Many gift cards also cannot expire within five years of purchase. Prepaid cards and reloadable cards may follow different rules. Check the card’s terms or the issuer’s website, and spend or transfer balances before they shrink.
Should you keep or close an old account?
| Keep it if | Close it if |
|---|---|
| It earns a good interest rate | It charges monthly or inactivity fees |
| You use it for a specific goal, like travel or emergencies | You have not used it in a year or more |
| It helps you separate money for budgeting | You have too many accounts to track |
| It has useful perks like ATM rebates | Your contact information is outdated |
| It is linked to automatic payments you need | It duplicates another account’s purpose |
Before closing, move any automatic payments or deposits, transfer the balance, download recent statements and ask the bank for written confirmation that the account is closed with a zero balance.
Quick summary
A dormant account fee is charged when an account goes unused for too long, and inactive accounts may eventually be turned over to the state. Keep accounts active with small transactions, update your contact details, close accounts you do not need and search unclaimed property databases if you think you have forgotten money. Reclaiming money from the state is usually free, so avoid paying third parties for simple claims.
Final tip
Put a recurring reminder on your calendar every six months to review all your bank, savings and prepaid accounts. Spending ten minutes twice a year confirming balances and making a small transaction where needed is the easiest way to make sure no account quietly drains away.
The bottom line
A dormant account fee is charged when an account sits unused for too long. To avoid it, make small transactions regularly, keep contact details current and close accounts you no longer need. If an account was transferred to the state, you can usually reclaim the money for free through your state’s unclaimed property office. For other bank fees, see NSF fees and wire transfer fees.
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