About Ken Tumin

Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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Frozen Accounts Due To Account Inactivity


Savers often come across a bank or credit union that penalizes them for account inactivity. A reader just emailed me about his experience with his TIAA Direct savings account. One day he found that he was not able to transfer funds into or out of his account. When he called, the TIAA Direct rep told him that the account had been locked after six months of inactivity. Fortunately, they did not charge him any inactive fees. So if you have a TIAA Direct account that is no longer active, you should either close the account or make sure you keep it active. One way to keep it active is to initiate transfers into or out of the account at least once every six months.

Freezing accounts when they’re inactive isn’t just done by banks. As I described last November, my share savings account at one of my credit unions was labeled as inactive and was frozen by the credit union. I found out about this when I tried to establish a link to the account from my Discover Bank account. I was planning to use this link to initiate ACH withdrawals when my credit union CD matured. The linking process failed due to the account being frozen. To re-activate my credit union savings account, I had to send the credit union a service request form and a copy of my driver's license. Once it became active again, I tried to redo the Discover Bank link process, but that failed. Discover Bank then required written proof of my ownership of the credit union account.

For both this credit union example and the example with TIAA Direct, an inactive account can create a lot of hassles even when you aren’t hit by fees. In the past, I have been hit by monthly fees that started when the accounts became labeled as inactive. Both cases were at credit unions, and the fees started after one year with no member-initiated transactions to the accounts.

Each time you open a bank or credit union account, you should make sure you know the answers to the following questions. If you have multiple accounts at one institution, don’t assume that activity in one account will meet activity requirements in another.

  • When is an account considered inactive? 3 months? 6 months? 1 year?
  • What happens when the account becomes inactive? monthly fees? account freeze?
  • What is considered an activity? Does an ACH transfer count?
  • What is the escheatment period? This is when the bank turns over the account to the state. The period can depend on state laws.

You should also be aware that these policies can change, and you may not be sent a change notice. DA member me1004 described the problems that can happen when a credit union changes its account inactivity policy.

To prevent account inactivity fees and having your account frozen, it’s a good idea to regularly review the latest rules. Unfortunately, this isn’t always easy. Last year I investigated the account inactivity policies at PenFed. The policies were not clearly described in PenFed’s online disclosures, and I didn’t get clear answers from a PenFed CSR. I had to get help from my PenFed contact.

One useful rule of thumb to avoid account inactivity is to make sure you initiate some account activity (such as initiating a transfer) at least once for every six months. You should also consider closing the account. That’s one easy way to avoid having to worry about changing policies and inactivity fees. Just be aware of the possibility of account closure fees.

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  |     |   Comment #1
Thanks for the reminder Ken. I have to log-on to my M&T Bank e-money market account once in a while to keep it active. Last year I had to send them a letter of request to reactivate the account.
  |     |   Comment #2
nice post. this post give me many informative information. thanks for give this post.
  |     |   Comment #3
Appreciate the TIAA CREF tip.  I was just on the telephone with them this morning.  They warned about the $2 penalty at one year.  But nothing was said about need for activity every six months.  This is good to know and will help me avoid inconvenience.

They also warned that it's now impossible to open new accounts.  So I took my balance down to a buck, but I did not close my account.  If their interest rate (currently at 0.75%) goes back up, I'll be positioned to take advantage. 
  |     |   Comment #4
Sorry for the off-topic post, but I wanted to let you know that there's a problem with your RSS configuration. Articles in your feed all point to http://feeds.feedburner.com/depositaccounts rather than to the appropriate blog entry. (It probably seems in your visitor analytics that you have a lot fewer RSS click-throughs than you actually do!)
  |     |   Comment #5
I have membership in a few hard to get into cu's.  I have minimal amount of money in each and am waiting for good cd rates.  most of them have activity requirements within a year.  LUckily, they are each members of the credit union service centers.  I have a center close to me and I have gone there to deposit a nickel to keep them active.
  |     |   Comment #6
A bank recently froze a MMA account of mine and hid it from view online. I did get a notice in the mail. Since they hid it from me online (visually), I chose to close the account.
  |     |   Comment #7
People commonly might have a credit union CD and 25$ in a savings account. I would be interested to know if any credit unions begin charging fees on the inactive savings account and then deduct those fees from a 5 year CD?..lol. That would not be cool.
  |     |   Comment #8
Yes, I've got charged $5-$10 for inactivity fee. Logging in onine is not enough (which I did), you have to make deposits or withdraw. The period ranges from 6 months to 2 years for the accounts that I have. And the requirement can change, as I knew there were no inactivity fees for some of the banks before.

With more online banking and people opening accounts with different banks, it's easy to let 6 months go by without any deposit or withdraws. I think banks/credit unions start catching up with and charging fees for inactivity.
  |     |   Comment #9
re. TIAA, I have had it with them. Over the 2-3 years I have had an account (with the bulk of my money), I have had maybe a handful of questions I wanted answers for (including this morning).  Their contact info includes secure emailing when logged into your account.  So, long story short, EVERY SINGLE TIME you waste a bunch of time typing in a clear, concise question, and EVERY SINGLE "ANSWER" is for you to phone them.

I will admit that I have a LOW tolerance for idiocy, but for the love of god, why would anyone ask you send an email and then follow up by telling you YOU HAVE TO PHONE.  I mean, if I wanted to phone, well, you know, I would have just fricking phoned in the first place.

Anyway, that's my experience dealing with TIAA.  Who knows, maybe that is why our education systems are failing...
  |     |   Comment #10
TIAA-CREF is geared towards the education industry.  They raised the minimum balance requirement on their mutual funds a couple of years ago and tacked on new fees. Leaving open accounts with just a few dollars in it seems like a waste of time to me (especially if you don't intend to add or subtract any money from it for the foreseeable future). The chance that this low interest paying bank is going to suddenly shoot to the top of the interest rate chart list seems very slim to me.
  |     |   Comment #11
I can understand why a bank would want to close small accounts with a low balance, but I would think they would want to keep larger deposits active or not.  Seem to me all these fees would just lead to a loss of customers that they would want to avoid.

I was thinking of opening a CD with them with the funds I have in their savings.  If they are going to be a problem I will take my money elsewhere.
  |     |   Comment #13
I've had a couple of different accounts go inactive, but always became aware of that before it got to the point of the bank or CU assessing a fee.

But one thing that's really bugged me about a couple of the institutions is that they froze my unused accounts -- without making any effort to notify or warn me first, even though they were continuing to email me monthly statements and have other kinds of communication.

If they're going to freeze an account or start assessing a dormant fee, they really ought to send a paper mail or email warning notice first.

  |     |   Comment #14

Dear Mr Tumin,

... >> Savers often come across a bank or credit union that penalizes them for account inactivity.

Savers? ... Won't that be the "account-holders"?

Does the bank or credit union spare inactive accounts of "traders" from penalty?  :-)

What's this with "savers/penalize" ... Do (so called) savers like to play victims?  :-)

Yours Truly,
- Anon
In FED I Trust  :-)

  |     |   Comment #18
Anyone know if the inactivity requirement applies to all accounts at a given credit union? I have RCAs at 2-3 CUs. I keep $5 in the savings account but don't touch it after I establish the RCA. I use the RCA monthly. Should I be concerned about the savings account being inactive?
  |     |   Comment #19
Just got bit by this one too. TIAA money market account frozen. Of course they don't tell you on the statements or online or even when it refuses to transfer money.  You have to call them, (messaging won't work), and then wait 1 to 2 business days and hope it gets fixed right.  I suppose any check I might have written would have bounced too!  That combined with the withdrawal limits and interest rates decreasing every month makes me regret I ever opened the account.
Rick Z
  |     |   Comment #20
I just ran into this inactive account problem with TIAA Direct discuseed in the May 20 article, but in my case I had actually made several transactions over the past few months -- transfers to external linked accounts. The representative I spoke to on the phone said the account had become inactive because I hadn't made any DEPOSITS in the past 6 months and suggested every now and then I ought to transfer a dollar in just to keep it active. Unbelievable! They've also been unable to figure out how to allow customers to log on with Google Chrome in the nearly two months since it was last updated. 
  |     |   Comment #21
I just received a letter from Discover Bank that my account will be changed to Dormant status due to inactivity. The crazy thing is that it is a CD! What kind of activity are they thinking should occur?
  |     |   Comment #22
Chase bank in So. Cal. closed my savings and checking account and sent my funds to state of California. I had it linked to an active business account. They showed me a web site where I can apply to the state to get the money back after I wait 3 months. They did not give me any warning notice whatsoever.  They gave me the job of getting my money back with a smile. So now I have a new chore to do. They aren't there to save me any time or effort. I plan to move my account elsewhere.
  |     |   Comment #23
Chase will not accept cash deposits for other accounts, (some) for accounts in your own name, privacy protection violates agreements AND state law, etc.

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