Don’t Sleep On Your Savings: Avoiding Inactive or Dormant Accounts
The best things to do with a savings account is to forget about it and let it earn dividends.
However, don’t forget about it so long that it becomes inactive or dormant. An inactive account is one that has had no activity for a year while a dormant account is one that has had no activity in three years. All dormant accounts cost financial institutions money; they’re required to keep records of the account and send statements. Often, those statements are returned due to incorrect addresses and then require additional effort from the institution. These minimal costs add up when involving hundreds of accounts.
To reduce and avoid costs, financial institutions are permitted to charge fees, close the accounts, and after three years can transfer the funds to the state treasury department through a process known as escheatment. State treasury departments hold those funds in an unclaimed property fund.
This money isn’t lost, but is difficult to access. To reclaim it, you must complete numerous forms and wait several weeks while your request is processed. It’s much harder than visiting your credit union!
Fortunately, there are steps you can take to avoid inactivity or dormancy.
1.) Keep track of your accounts.
You should know always where all your money is. Our mobile app lets you monitor all your accounts in one place by combining them in one screen. This way, you’ll never risk inactivity or dormancy by forgetting about an account.
2.) Automate your savings.
An account can’t go inactive or dormant if it’s getting transactions regularly, even if it’s only $5 a month. But who can remember to do that every month, or would want that burden?
To achieve this easily, set up automatic transfers between your primary account and your savings, even for a minimal amount. This form of automatic savings keeps your account active.
3.) Clean up and roll over old accounts.
If you create different accounts for different savings goals, you might accumulate a dozen accounts over time, some of which you’ll forget to close when they’ve served their purpose. Each of those accounts is at risk for dormancy!
One way to avoid this is to make a general-purpose savings account and consolidate your funds there once every few months. Use that money for any purpose – anything is better than letting it risk being lost.
Similarly, If you’ve changed jobs, ask a financial planner about rolling over your old retirement account. Whatever you choose to do with your old retirement plan is better than nothing. Set up a free, no obligation consultation with the credit union’s certified financial planner to discuss your goals.
Act before it’s too late; clean up your accounts today!