When your bank account remains inactive for two consecutive years, it gets commonly labelled as “dormant” or “inoperative”, and several services are cut off until you do a reactivation. Depending on the country and the bank, the rules vary a bit, but in general, they are the same.
The moment an account goes dormant
After a period of inactivity of 24 months, most banks will consider either a savings or a checking account as dormant. This implies no cash deposits or withdrawals and no use of cards, and no fund transfers. Generally, automatic interest credits and bank charges do not account for activity.
What limitations will you have?
After the account has been labelled dormant, you might not be able to access your funds via debit card, ATM, checks, UPI or online transfers. Going with the account restrictions, standing instructions, and auto-debits typically cease, leading to the non-payment of EMIs, subscriptions, or bills linked to that account. Generally, the interest on savings is paid continuously, but the access to the principal is limited.
Dangers of non-use
Banks could start to deduct maintenance or inactivity charges, particularly if the account balance is low. Then, if the account remains inactive for a very long time, about a decade, the remaining balance can be transferred to a national “unclaimed deposits” fund, and thereafter you have to go through the whole process of claiming formally. Besides, dormant accounts are more prone to unnoticed fraud because monitoring is not done by you.
How to avoid and remedy dormancy
To keep the account active, every few months, make at least one small transaction, for example, a deposit, withdrawal, or online transfer. If your account is already dormant, visit the nearest branch along with your ID and use the bank’s reactivation procedure to update KYC and request service restoration. If the account is no longer necessary, close it officially instead of merely ignoring it.
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