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Avoid Penalties For Idle Bank Accounts

Tuesday, June 18, 2013 - 7:11 AM
From Kiplingers:
Maybe you’ve opened a savings or money market deposit account to stash cash you don’t plan to deal with often -- say, money to tap in an emergency. Or perhaps you put a small deposit in a savings account to meet a credit union’s membership requirements. If you leave the money untouched too long without making a transaction, the institution may slap you with an inactivity fee.

Read more

The article quotes a respected source, who offers tips on how to avoid these fees. 

Spoiler alert:  Good job Ken!
7
pearlbrownpearlbrown1,436 posts since
Nov 2, 2010
Rep Points: 6,264
1. Tuesday, June 18, 2013 - 4:53 PM
I have a few idle RCAs (Widget and Pelican State), which I need to be very careful on incurring regular activities.  Two CD accounts (Evolve and SACU) are another point of caution. 

Other than those, I typically close accounts when not needed.

Note; For CDs, I meant the savings accounts that go with opening CDs at credit unions.
1
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,426
2. Wednesday, June 19, 2013 - 9:10 AM
I have an easy solution to this issue.

When I open an account at a credit union --- I set up an AUTO TRANSFER of $.10 from the checking to the savings and then 2 days later, AUTO TRANSFER it back. I leave $1.00 in the checking to always have the $.10 covered.

The same can be done between two bank accounts.

PROBLEM SOLVED
3
pdxmalepdxmale91 posts since
Jul 11, 2010
Rep Points: 270
3. Wednesday, June 19, 2013 - 9:24 AM
Re:  2. Wednesday, June 19, 2013 - 9:10 AM

For accounts at institutions where the only relationship is a CD I do something similar: ACH transfer $1-$5 into the savings (or checking) account every 6 months.  Some institutions may consider the account dormant / inactive and charge an inactivity fee after a shorter period (say, 3 months), but I have not run into that.  

I do have idle bank accounts (for example at a credit union with a FOM for which I no longer qualify) which I choose to maintain in optimistic anticipation of a return to better rates.  The every-6-month deposit is simply the annoying overhead associated with that strategy.
2
pearlbrownpearlbrown1,436 posts since
Nov 2, 2010
Rep Points: 6,264
4. Wednesday, June 19, 2013 - 9:48 AM
I set up the above to happen every MONTH - never an inactivity issue that way. CD's don't usually need to have activity as they incur interest posts often enough. I have never had a problem with a CD and inactivity.
2
pdxmalepdxmale91 posts since
Jul 11, 2010
Rep Points: 270
5. Wednesday, June 19, 2013 - 9:59 AM
That may be true for CDs but dont count on savings accounts to consider

interest deposits to cover the inactivity clause. BTDT
1
RicochetRicochet133 posts since
Jan 19, 2010
Rep Points: 363
6. Wednesday, June 19, 2013 - 10:09 AM
Re:  4. Wednesday, June 19, 2013 - 9:48 AM

I don't worry about CD accounts themselves not having activity.

However, I open either a checking or savings account at every institution where I have a CD (if that is the only relationship I have with them).  The checking or savings account is how I transfer money to fund the CD and  redeem it at maturity.  That checking/savings account is what receives the $1-$5 deposit every 6 months.  

I typically let the interest earned by the CD be added back to the CD to gain the benefit of compounding.  Otherwise I imagine I would ask for it to be transferred to that account (which might eliminate the question of inactivity, but maybe not), and I could move it out myself to whatever other account I wanted. 
3
pearlbrownpearlbrown1,436 posts since
Nov 2, 2010
Rep Points: 6,264
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