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Inactive vs dormant savings account Understand the difference



a Savings Account

When it comes to savings accounts, there are various terms used to describe their status. Two of the most common terms used are “inactive” and “dormant”. While these two terms might seem interchangeable, they have distinct meanings. Understanding the difference between an inactive and a dormant savings account can help you avoid penalties and ensure your account stays in good standing.

What is an inactive savings account?

An inactive savings account is an account that has had no customer-initiated transactions for a specific period of time, usually over 1 year. Transactions could include deposits, withdrawals, or transfers. Inactivity does not mean that the account is closed, but it does mean that the account is not being used.

The main consequence of an inactive savings account is that the bank may start charging a fee for account maintenance. This fee can vary from bank to bank and add up over time. To avoid this fee, simply make a transaction, such as a deposit or withdrawal, into the account before the deadline.

What is a dormant savings account?

A dormant savings account is similar to an inactive account but with some added consequences. A savings account becomes dormant when it has had no customer-initiated transactions for an extended period of time, usually around over 2 years. Once an account becomes dormant, the bank will often take additional steps to try to contact you. This may include sending letters or calling the phone number on file.

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If you don’t respond to these attempts related to contact, the bank may take more drastic measures. This could include transferring the funds in the account to the state government as unclaimed property or even closing the account altogether.

Key differences between inactive and dormant savings accounts

Inactive savings account Dormant savings account
Timeframe Over 1 year Over 2 years
Account Access Account is still open and accessible Access to the account may be limited
Consequences Account maintenance fee; account stays open Risk of account closure; possible fee to close account
Bank Actions May charge a fee for account maintenance May transfer funds to state government or close account

Tips to avoid inactive and dormant savings accounts

To avoid having your savings account become inactive or dormant, there are a few simple steps you can take:

  • Set up automatic deposits or transfers to your savings account on a regular basis. This will ensure activity in the account and help you reach your savings goals.
  • Keep track of your savings account balance and monitor any fees that may be charged. If you notice that your account has become inactive, deposit or withdraw to avoid any maintenance fees.
  • Update your contact information with your bank to ensure they can reach you if your account becomes dormant. This includes your phone number, email address, and physical address.


While an inactive and a dormant savings account might seem similar, they do differ. Understanding the difference can help you avoid fees and ensure your savings account stays in good standing.

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