Don’t Sleep On Your Savings: Avoiding Dormant Accounts

Posted June 10, 2024

The best thing to do with a savings account is to let it sit and earn dividends.

However, don’t forget about it so long that it becomes dormant. A dormant savings account is one with a low balance that has had no deposits or transactions in a while. At Bay Federal, accounts that have been inactive for more than six months are considered dormant. Financial institutions often place holds on these dormant accounts to protect them from fraud, which will require action by the member to remove the hold.

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 in California are required to close these accounts after two years and 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 dormancy.

Keep Track of Your Accounts

You should always know where all of your money is. BayFedOnline, the BayFed Mobile app, and other third-party apps let you monitor all your accounts in one place by combining them in one screen. This way, you’ll never risk dormancy by forgetting about an account.

Automate Your Savings

An account can’t go 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.

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 risking it being lost. You should also consider whether you have the best savings account for your situation and your goals. For instance, our Money Market Advantage accounts are a great way to earn more dividends than you might with a traditional savings account. If you have a higher balance, then a Certificate account or a Titanium Savings account might be a better fit for you.

Act before it’s too late and clean up your dormant accounts today!

Categories: FinancialAdvice