What will happen if you don't use your bank account?

Consequences of Inactivity on Bank Accounts

Financial institutions typically implement policies that define account dormancy and subsequent closure procedures. Prolonged inactivity in a bank account can trigger these policies, leading to account closure.

Timeframe for Account Dormancy

Most institutions establish a specific timeframe within which an account must demonstrate some level of activity to remain active. This timeframe generally ranges from one to two years, but may vary depending on the financial institution.

Dormant Account Status

When an account becomes inactive for the specified period, it enters a dormant status. The account holder is typically notified of this status, and they have a certain amount of time to reactivate the account by making a transaction or contacting the financial institution.

Account Closure

If the account remains dormant beyond the specified timeframe, the financial institution may proceed with account closure. This involves freezing the account, transferring any remaining balance to the state’s unclaimed property office, and closing the account permanently.

Reasons for Bank Account Closure

Banks implement these policies for several reasons:

• Preventing Fraud: Dormant accounts can become targets for fraudulent activity, as they are often overlooked by account holders.
• Reducing Costs: Maintaining inactive accounts can be costly for banks, as they still require resources to administer.
• Compliance with Regulations: Financial institutions are subject to regulations that require them to manage inactive accounts responsibly.

Consequences of Account Closure

Account closure can have several negative consequences for account holders:

• Loss of Funds: Any remaining balance in the closed account will be transferred to the state’s unclaimed property office. Reclaiming these funds can be a time-consuming and challenging process.
• Impact on Credit Score: Dormant accounts do not contribute to credit building, and closing them can negatively impact your credit score.
• Inconvenience: Inactive accounts can be useful for various purposes, such as holding emergency funds or serving as a backup account. Their closure can create inconvenience.

Avoiding Account Closure

To prevent account closure, it is essential to maintain regular activity in your bank accounts. This can be achieved by:

• Making deposits or withdrawals on a periodic basis
• Using the account for bill payments or automatic transfers
• Contacting the financial institution and requesting an extension of the inactivity period

By taking these steps, you can ensure that your bank accounts remain active and avoid the potential consequences of account closure.