Dormant Account

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Definition of 'Dormant Account'

A dormant account is a bank account that has been inactive for a period of time, typically 12 months or more. Dormant accounts can be a source of frustration for account holders, as they may not be aware that their account has been inactive and may not be able to access the funds.

There are a number of reasons why an account may become dormant. The most common reason is that the account holder has moved and has not updated their address with the bank. Other reasons include death of the account holder, the account holder becoming incapacitated, or the account holder simply not using the account.

When an account becomes dormant, the bank is required to take certain steps to protect the funds. These steps may include sending a letter to the account holder at the last known address, sending the account holder a statement every year, and/or transferring the funds to a state-chartered trust company.

If an account holder does not respond to the bank's attempts to contact them, the bank may eventually close the account and turn the funds over to the state.

There are a number of things that account holders can do to prevent their accounts from becoming dormant. These include:

* Keeping their address up-to-date with the bank
* Using the account regularly
* Responding to any correspondence from the bank
* Setting up an automatic deposit or transfer to the account

If an account holder believes that their account has been closed erroneously, they should contact the bank immediately. The bank may be able to reopen the account and return the funds to the account holder.

Dormant accounts can be a source of frustration for account holders, but there are a number of things that can be done to prevent them from becoming dormant. By taking steps to keep their accounts active, account holders can ensure that they have access to their funds when they need them.

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