Katelyn Fugate thought she was doing something nice for her young son. A few years back, she opened a savings account for him — a small starter fund he could build on one day. Recently, she decided to check in on it.
The balance was zero.
Fugate told Scripps News she went to check the balance hoping to start adding to it again. Instead, she found the account empty. (1) The bank had declared it dormant after five years of inactivity, closed it and shipped the money off to the state’s unclaimed funds department. Worse, when Fugate went looking for it, she couldn’t find the money at the bank or the state.
“It’s definitely not at the bank; they’ve turned it over. I can’t find it on the missing funds [website] as of yet,” she said.
The process is called escheatment, and it’s the law in all 50 states. (2) When an account goes long enough without customer-initiated activity, the bank is required by state law to hand the balance over to the state treasurer’s office as unclaimed property.
How long is “long enough” varies. Most states set the dormancy period at three to five years for bank accounts — and the trend has been toward shorter windows. Over a recent 16-year stretch, 17 jurisdictions cut their dormancy periods for bank properties to three years, down from five or seven. (3)
Automatic activity doesn’t reset the clock. Auto-deposits and interest postings don’t qualify as customer-initiated activity (4) — only a deposit, withdrawal or transfer you personally make resets it.
Before the money leaves, banks are required to attempt to contact you — typically by mail to your last known address. If the letter goes somewhere outdated or gets tossed as junk, escheatment continues without you. In some cases, the bank may simply mail a check for the remaining balance — little help if that check lands at an old address.
Ted Rossman, a principal analyst at Bankrate, told Scripps News that some banks flag inactivity after as little as six months.
“That would be no money moving in or out, no transactions for six months,” he said. “Sometimes the threshold is a bit longer.”
Inactivity fees typically run $5 to $20 per month. For a small account — say, a few hundred dollars set aside for a child — those fees can wipe the balance out entirely before the state ever sees a dime.
There’s a secondary cost most people overlook: once a bank closes a dormant account, any scheduled transactions tied to it fail, which can trigger late fees or missed income depending on what was running through it. And under Regulation DD, banks must continue paying interest on dormant interest-bearing accounts (5) — but if the monthly dormancy fee exceeds the interest earned, the balance still shrinks.
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Roughly $70 billion in unclaimed property is sitting in state coffers, waiting for rightful owners to come claim it — money from forgotten bank accounts, uncashed checks, safe deposit boxes and old brokerage holdings. About one in seven Americans has some of it. In fiscal year 2024, states returned $4.49 billion to owners (6) — a fraction of what they’re holding.
California alone holds more than $15 billion in unclaimed property and has returned roughly 3.5% of it, according to a recent CBS News investigation. (7) The scrutiny has now reached Washington: a bipartisan bill called the SAFER Act, introduced this month by Reps. Sam Liccardo and Mike Lawler, would limit when states can take custody of securities, digital assets and investment accounts under unclaimed property laws.
Most states place no statute of limitations on claiming escheated funds, meaning owners can demand their money back at any time. The reclamation process varies by state, though — and some are notoriously slow, as Fugate is discovering firsthand.
Rossman’s fix: keep the account moving, even a little.
“Even if it’s something small — put your Netflix subscription on there and have that transaction once a month. Kind of restart the clock,” he said.
His other tips:
Periodically move money back and forth between accounts
Automate small transfers so you don’t have to remember
Check your bank’s specific inactivity policy — thresholds and fees vary widely
Shop around before you open the account. “Not every bank’s policies are the same, so you might want to look around before you even sign up and get into more of a fee-friendly kind of account,” Rossman said
Also: keep your address updated with the bank so any inactivity notices actually reach you.
Start with the National Association of Unclaimed Property Administrators at unclaimed.org, which links to every state’s official database, or MissingMoney.com, NAUPA’s free multi-state search tool. Searches are free. Be wary of third-party “finders” who offer to recover your money for a cut — you can almost always do it yourself at no cost.
And if you’ve got accounts sitting idle for your kids? Set a calendar reminder. A two-minute transfer once a year is all it takes to keep their savings from ending up in a state vault — or chewed through by inactivity fees first.
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Scripps News (1); HelpWithMyBank.gov / OCC (2, 4); Sovos (3); eCFR (5); NAUPA (6); CBS News (7)
This article originally appeared on Moneywise.com under the title: Expert issues warning over US bank accounts sitting idle: Money can now be turned over to state. Secure your money ASAP
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
