Katelyn Fugate recently checked a savings account she set up for her young son a few years back.
Like many parents, she opened the account and left it alone.
"I went to check on it to see what the balance was and hopefully start adding to it again. The balance was zero, which I was very surprised about," Fugate said.
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What happened? It turns out the bank declared the account dormant after five years of inactivity and turned the funds over to the state's unclaimed funds department.
However, Fugate tells us she hasn't been able to locate the money.
"It's definitely not at the bank; they’ve turned it over. I can't find it on the missing funds [website] as of yet," Fugate said.
WATCH as a mom warns about what can happen when you leave a bank account alone:
Inactivity risks
Ted Rossman, a principal analyst with Bankrate, said some banks flag inactivity after as little as six months.
"That would be no money moving in or out, no transactions for six months," he said. "Sometimes the threshold is a bit longer."
Some financial institutions charge a fee for inactivity ranging from about $5 to $20 per month. If an account sits dormant for too long, the bank will close it.
"Three to five years, you might have to go to the state to get the money back," Rossman said.
In some cases, a bank may mail a check for the money left in your account.
According to Bankrate, any scheduled transactions will fail, which could cause late fees or missed income, depending on the type of account
How to avoid fees or closures
It only takes a few dollars moving in and out of an account to keep it active and prevent closure.
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"Even if it's something small -- put your Netflix subscription on there and have that transaction once a month. Kind of restart the clock," Rossman said.
Rossman also recommends the following steps to keep an account active:
- Periodically move money back and forth
- Automate small transfers
- Check your bank's inactivity policy
"Not every bank's policies are the same, so you might want to look around before you even sign up and get into more of a fee-friendly kind of account," Rossman suggested.
We contacted Fugate's bank, which said it will investigate where the money went. Meanwhile, she is warning other parents to keep children's accounts active.
"I didn't know about this until it happened to me, and I don't want it to happen to somebody else," Fugate said, so you don't waste your money.
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