Dormancy fee on my savings account!?

[cmurdough]

I opened a savings account at a local bank seven years ago. Since then I moved, and the bank has no branches near me. I have an ATM card, but using it will cost me a fee because, again, the bank has no branches near me. I’ve left the account alone, content to leave the relatively small amount of money in it to earn interest, and knowing that I might access the money via the ATM card if necessary.
I was unpleasantly surprised to open a recent statement from the bank (Manufacturer’s Bank) in which I was told that a $10.00 dormancy fee had been assessed to my account. Ten dollars may not seem like a lot, but when the annual interest earned is roughly two dollars, it’s frustrating to have years worth of interest swept away without my knowledge. I called the bank and was told that I have to at least do a balance inquiry on my account every eighteen months to avoid the fee. Of course I knew nothing of this, and of course it was buried in the fine print when I opened the account. I’m angry about it, though, and I feel like closing the account—something I’ve avoided doing because I’ve read that closing accounts isn’t good from a credit rating standpoint.
So my question is: do all banks have these dormant fees? If so, I’ll leave the account open. If not, I’ll close it as my little way of showing them what I think of their dormancy fee.

[Joey P]

Call them back, re-explain the situation to whomever answers the phone. Ask if they can remove the fee ("I wasn't aware there was a dormancy fee, it's been so long since I've read the original terms, is there anyway you could remove that?), if/when they say no, tell them you'd like to close the account and ask them to mail a check for the balance. Closing a savaings account should have no effect on your credit report.

Oh, and make sure your calm and talk nicely. Calling up angry will result in the other person being defensive and holding their ground.

[aahala]

All banks may not charge a dormant fee, but all banks within the US are under regulatory requirements to track and eventually get rid of these accounts. In some states, the balance is transferred to the state.

The reason for this is that dormant accounts represent accountholders who have forgetton about the account or are dead. Without the regulations, funds from these accounts could be easily stolen by bank employees and there would be little chance of discovery.

[control-z]

Originally Posted by aahala

All banks may not charge a dormant fee, but all banks within the US are under regulatory requirements to track and eventually get rid of these accounts. In some states, the balance is transferred to the state.

The reason for this is that dormant accounts represent accountholders who have forgetton about the account or are dead. Without the regulations, funds from these accounts could be easily stolen by bank employees and there would be little chance of discovery.

That sort of goes against long-term savings; put as much money as you can into an account and leave it alone, letting it slowly grow with time.

[Sean Factotum]

Originally Posted by control-z

That sort of goes against long-term savings; put as much money as you can into an account and leave it alone, letting it slowly grow with time.

The assumption, I think, is that you'd continue to make deposits in this situation. Otherwise, buy a Certificate of Ceposit of something similar.

[RealityChuck]

You don't have to deposit or withdraw for an account to be active: merely going to the branch and asking them to update your interest is enough.

I don't think they have to contact you, but any account that has no transactions after a given amount of time (varies by state) is transferred to the state. Note that you can get the money back from the state at any time (there's usually a department that handles it), but you get no interest added after the state takes it over.

[Otto]

Originally Posted by aahala

All banks may not charge a dormant fee, but all banks within the US are under regulatory requirements to track and eventually get rid of these accounts. In some states, the balance is transferred to the state.

But the money is not the state's to keep. Every state has unclaimed property offices and periodically attempt to locate the legal owners. If you google "unclaimed property (name of state)" you'll get a link to your state's online database. Also probably a bunch of commercial links offering to find it for you, which are unnecessary since the state databases are free. I located some property belonging to my deceased grandmothers and alerted my parents to it so it could be claimed. Still haven't gotten my finder's fee though.

[iamthewalrus(:3=]

Originally Posted by aahala

Without the regulations, funds from these accounts could be easily stolen by bank employees and there would be little chance of discovery.

Which is of course why the bank adds a fee. Why let employees steal the money when the bank can get it instead!

[t-bonham@scc.net]

Originally Posted by iamthewalrus(:3=

Which is of course why the bank adds a fee. Why let employees steal the money when the bank can get it instead!

Quite right; that's exactly what they do.

And many banks are claiming that they are only required to turn over to the state inactive accounts, and since there was a transaction on the account this year (their $10 dormancy fee) it isn't inactive. So in effect, the bank never turns it over to the state unclaimed property dept, but instead keeps it active and takes a little bit out of the account every year, until they've got all of it.

[panache45]

I discovered the hard way that my former bank charges a whopping $25/month inactivity fee. That's why they're my former bank.

[silenus]

My CU sent me a notice of inactivity on one of our savings accounts, warning me to do something with it in the next year to avoid this kind of thing. I guess credit unions are nicer than commercial banks. At least I got a note.

[Doctor Jackson]

Originally Posted by t-bonham@scc.net

Quite right; that's exactly what they do.

And many banks are claiming that they are only required to turn over to the state inactive accounts, and since there was a transaction on the account this year (their $10 dormancy fee) it isn't inactive. So in effect, the bank never turns it over to the state unclaimed property dept, but instead keeps it active and takes a little bit out of the account every year, until they've got all of it.

That's absolutely not the way it works. By statute, inactivity (and later, dormancy) is only reversible by action of an account owner. That action can be a deposit, withdrawal, balance inquiry or letter stating that the owner knows about the account. No bank initiated transaction can change a status of "inactive" or "dormant". If your theory was true, no account would ever be escheated to the state. I can assure you that they are.

[astro]

Why should banks in a nominally capitalist society charge nothing for maintaining small, inactive accounts that generate no activity (and little profit) for the banks? When did they become charities? Why is charging a fee unreasonable?

[UncleBeer]

Originally Posted by astro

Why should banks in a nominally capitalist society charge nothing for maintaining small, inactive accounts that generate no activity (and little profit) for the banks? When did they become charities? Why is charging a fee unreasonable?

GQ man, GQ.

[Dag Otto]

Originally Posted by Joey P

Call them back, re-explain the situation to whomever answers the phone. Ask if they can remove the fee ("I wasn't aware there was a dormancy fee, it's been so long since I've read the original terms, is there anyway you could remove that?), if/when they say no, tell them you'd like to close the account and ask them to mail a check for the balance. Closing a savaings account should have no effect on your credit report.

Oh, and make sure your calm and talk nicely. Calling up angry will result in the other person being defensive and holding their ground.

And if all else fails, use the ATM card and withdraw most of the money. BofA hassled me when I tried to close a checking account with something like $816.76 in it. I wrote a check to myself for $816.00, deposited it at another bank, and forget about it. Not sure why I left the 76 cents though.

[control-z]

I remember studying a bank's annual report a few years back and 40% of their income came from fees.