Table of Contents

Dormant Account


A dormant account refers to an account in which there has been no financial activity for a long period, typically for at least a year. It includes both deposit accounts at banks and brokerage accounts in investment firms. The specific period of inactivity to label an account as dormant may vary depending on the institution’s policy.


The phonetic pronunciation of “Dormant Account” is “dawr-muhnt uh-kount”.

Key Takeaways

  1. Dormant Account: A Dormant Account is essentially a bank or brokerage account that has seen no activity (either deposits or withdrawals) for a prolonged period of time, usually specified as six months or a year.
  2. Regulations: Banks and financial institutions have specific regulations they need to follow regarding Dormant Accounts. After a certain period of no activity, they are required to try and reach out to the account holder. If the account remains dormant for a longer period (which varies by country), the funds may be turned over to the government.
  3. Reactivation: Dormant Accounts can usually be reactivated by the account holder through contacting the bank or financial institution, providing proper identification, and possibly making a deposit or withdrawal to reaffirm the account’s active status.


A Dormant Account is a significant term in business/finance because it refers to an account in which there has been no financial activity for a long period of time, except for the posting of interest or fees. Banks and financial institutions often declare an account to be dormant if there are no transactions or activities over a certain period, which varies from institution to institution. This concept is important because, to protect the customer, the institution often suspends further transactions until the account owner reactivates it, preventing possible fraudulent activity. Furthermore, in many jurisdictions, if an account remains dormant for a specific period, the balance may be turned over to the government as unclaimed property, which can result in the loss of funds if not dealt with promptly. Hence, understanding the concept of dormant accounts is critical for individual customers and businesses in managing their finances effectively.


A dormant account, commonly found in the world of banking and finance, serves a variety of purposes. Firstly, it aids in safeguarding customers’ interests. Such accounts might belong to customers who have neglected or forgotten their accounts, as well as those who have chosen not to operate them for a significant period of time. By designating these accounts as dormant, banks can limit potential fraudulent activities, thus providing an additional layer of protection for account owners against unauthorized transactions, which might otherwise remain undetected.Furthermore, classifying an account as dormant also simplifies the bank’s operational and administrative tasks. Banks often set a stipulated period of inactivity, typically around 12-24 months, after which an account will receive this status. This strategy aids in mitigating the risks connected with maintaining such accounts and assists with the bank’s internal account management. They can monitor these accounts more closely, streamline their regular upkeep and clear up any nonperforming assets. Consequently, by correctly managing dormant accounts, banks can improve operational performance, reduce potential liabilities, and enhance customer protection.


1. Personal Savings Account: Mr. Smith opened a savings account several years ago with a specific bank. After some time, he switched jobs, moved to a new city, and started handling all his transactions through another bank, forgetting about his initial savings account. This account had no activity for over a year, making it a Dormant Account.2. Business Bank Account: A small bookstore had a separate business account for purchasing books from international vendors. However, when the store switched to local suppliers, they stopped using this account, leaving it without any transactions for 2 years. The account was then classified as a Dormant Account by the bank.3. Investment Account: Ms. Anderson had an investment trading account, which she used enthusiastically for a few months. Over time, she decided to focus her investments elsewhere and stopped making transactions in this account. After two years of inactivity, the account was deemed a Dormant Account by the investment brokerage firm.

Frequently Asked Questions(FAQ)

What is a Dormant Account?

A Dormant Account refers to an account in a financial institution that has had no activity for a long duration, usually for at least a year, with activity defined as deposits or withdrawals.

How does an account become dormant?

An account becomes dormant if there is no transaction such as deposits or withdrawals for a certain period of time, typically a year or two depending on the institution’s regulations.

What happens to the money in a dormant account?

The money in a Dormant Account is still kept safe. However, if the account remains dormant for an extended period, it may be handed over to local government as unclaimed property, depending on the laws in your region.

How can I reactivate a dormant account?

A dormant account can be reactivated by performing a transaction, such as a deposit or withdrawal. The exact procedure may vary according to your financial institution’s policies.

Are there charges associated with a dormant account?

Some banks may charge a dormant account fee if an account is inactive for a certain period of time. The fee and conditions will vary from one financial institution to another.

Can a dormant account affect my credit score?

Generally, a dormant bank account does not impact your credit score. However, any debts or overdraft charges associated with the account can certainly affect your score if they go unpaid.

How can I prevent my account from becoming dormant?

Regular transactions such as deposits, withdrawals, or transfers can prevent your account from becoming dormant. If you don’t frequently use the account, scheduling automatic transactions may be beneficial.

How will I know if my account has become dormant?

Banks typically send notifications via mail or email if your account is about to go dormant. This serves as a reminder to make a transaction and keep your account active.

Can a dormant account be closed?

Yes, if an account remains dormant for an extended period, the bank has the right to close it. However, the length of time required and the process for closing the account varies among banks.

Related Finance Terms

  • Inactive Account
  • Account Fees
  • Account Reactivation
  • Unclaimed Money
  • Bank regulations

Sources for More Information

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