A bank checking account or savings account is considered dormant if the account has had no activity for an extended period of time.  Funds held in a dormant account remain available to the account holder once they have reactivated the account with the bank.  The time frame that passes before the bank determines that an account is considered dormant is generally established by the bank holding the account.

Some consumers confuse a dormant account with an account that has become abandoned and has been escheated to the state where the account is held.  Escheatment is the process in which the funds in an account are sent to the appropriate state agency after the account is deemed to be abandoned.  An account moves from being labeled dormant to abandoned after a predetermined amount of time has passed without activity and the account holder does not respond to a notice or notices sent by the bank to locate the account holder.

The time frame of inactivity when an account is labeled an abandoned account is established by state laws not the bank.  While a bank may determine how much time passes before an account is labeled dormant, state laws dictate when a bank must decide when an account is abandoned and then escheat the funds in the account to the state.

Banks don’t want to go through the escheatment process and send the money to the state, they prefer to hold the account holders funds and will try to notify the account owner to keep the account active.  A dormant account is essentially an inactive account held at the bank that can usually be reactivated relatively easily giving the account holder access to their money without difficulty.

An abandoned account, on the other hand, is no longer with the bank and the funds will no longer be accessible to the original account holder through the bank.  With abandoned accounts, the state serves as custodian to the property and the owner of the funds can claim their money through the state agency instead of the bank.

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