Are savings accounts in the USA considered dormant if their only activity is accumulating interest?

Question

I know a checking account gets a warning of dormancy after one year of idleness. But a savings account accumulates interest. Is that interest considered activity that keeps it from becoming dormant? Or do you have to periodically deposit or withdraw money to keep the account active?

Answer 1

In my experience earning interest is not enough to keep the account in a non-dormant state. If payment of interest was the trigger to reset the clock then no savings account would ever be considered dormant.

In general as the account got close to the deadline we were notified that a single transaction moving money into or out of the account would reset the clock.

I have had this happen in recent years with a bank account and a credit union account.

In researching for the exact definition of a dormant account I found this regarding interest on the FDIC website:

6. Dormant accounts. Institutions must pay interest on funds in an account, even if inactivity or the infrequency of transactions would permit the institution to consider the account to be "inactive" or "dormant" (or similar status) as defined by state or other law or the account contract.

That means that the state law may set the definition, it also means that you should look at the information regarding the bank policy.

I did try and see if the rules for a credit union are the same. The added twist with a credit union is that if the account is closed, they are no longer a share holder and that brings into the discussion voting rights. So the policy/guidelines is even more complex.

If the account does go inactive state law will define what happens to the account, and how you can get the funds back.