Money can now be turned over to state. Secure your money ASAP

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Katelyn Fugate thought she was doing something nice for her young son. A few years back, she opened a savings account for him — a small starter fund he could build on one day. Recently, she decided to check in on it.

The balance was zero.

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Fugate told Scripps News she went to check the balance hoping to start adding to it again. Instead, she found the account empty. (1) The bank had declared it dormant after five years of inactivity, closed it and shipped the money off to the state’s unclaimed funds department. Worse, when Fugate went looking for it, she couldn’t find the money at the bank or the state.

“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,” she said.

How dormant accounts get swept up by the state

The process is called escheatment, and it’s the law in all 50 states. (2) When an account goes long enough without customer-initiated activity, the bank is required by state law to hand the balance over to the state treasurer’s office as unclaimed property.

How long is “long enough” varies. Most states set the dormancy period at three to five years for bank accounts — and the trend has been toward shorter windows. Over a recent 16-year stretch, 17 jurisdictions cut their dormancy periods for bank properties to three years, down from five or seven. (3)

Automatic activity doesn’t reset the clock. Auto-deposits and interest postings don’t qualify as customer-initiated activity (4) — only a deposit, withdrawal or transfer you personally make resets it.

Before the money leaves, banks are required to attempt to contact you — typically by mail to your last known address. If the letter goes somewhere outdated or gets tossed as junk, escheatment continues without you. In some cases, the bank may simply mail a check for the remaining balance — little help if that check lands at an old address.

Read More: Robert Kiyosaki warned of a ‘Greater Depression’ — with millions of Americans going poor. Was he right?

The fees hit before the state does

Ted Rossman, a principal analyst at Bankrate, told Scripps News that 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.”

Inactivity fees typically run $5 to $20 per month. For a small account — say, a few hundred dollars set aside for a child — those fees can wipe the balance out entirely before the state ever sees a dime.

There’s a secondary cost most people overlook: once a bank closes a dormant account, any scheduled transactions tied to it fail, which can trigger late fees or missed income depending on what was running through it. And under Regulation DD, banks must continue paying interest on dormant interest-bearing accounts (5) — but if the monthly dormancy fee exceeds the interest earned, the balance still shrinks.

Fortunately, avoiding inactivity fees is usually pretty simple. Many financial institutions offer high-yield savings accounts that come with no monthly charges, no inactivity fees and no minimum balance requirements.

The added bonus? Your idle cash can keep earning above-average interest while it sits there. It also stays liquid, meaning that you’ve got it on hand for emergencies if needed.

A high-yield account like a Wealthfront Cash Account can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your money when you need it.

A Wealthfront Cash Account currently offers a base APY of 3.30% through program banks, and new clients can get an extra 0.75% boost during their first three months on up to $150,000 for a total variable APY of 4.05%.

That’s ten times the national deposit savings rate, according to the FDIC’s March report.

Additionally, Wealthfront is offering new clients who enable direct deposit ($1,000/mo minimum) to their Cash Account and open and fund a new investment account an additional 0.25% APY increase with no expiration date or balance limit, meaning your APY could be as high as 4.30%.

With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, you get access to up to $8M FDIC Insurance eligibility through program banks.

There’s a lot of forgotten money out there

Roughly $70 billion in unclaimed property is sitting in state coffers, waiting for rightful owners to come claim it — money from forgotten bank accounts, uncashed checks, safe deposit boxes and old brokerage holdings. About one in seven Americans has some of it. In fiscal year 2024, states returned $4.49 billion to owners (6) — a fraction of what they’re holding.

California alone holds more than $15 billion in unclaimed property and has returned roughly 3.5% of it, according to a recent CBS News investigation. (7) The scrutiny has now reached Washington: a bipartisan bill called the SAFER Act, introduced this month by Reps. Sam Liccardo and Mike Lawler, would limit when states can take custody of securities, digital assets and investment accounts under unclaimed property laws.

Most states place no statute of limitations on claiming escheated funds, meaning owners can demand their money back at any time. The reclamation process varies by state, though — and some are notoriously slow, as Fugate is discovering firsthand.

How to keep your accounts out of the state’s hands

If you think you already have unclaimed money, start with the National Association of Unclaimed Property Administrators at unclaimed.org, which links to every state’s official database, or MissingMoney.com, NAUPA’s free multi-state search tool. Searches are free. Be wary of third-party “finders” who offer to recover your money for a cut — you can almost always do it yourself at no cost.

Once you’ve recovered your unclaimed money, consider investing it prudently so that your cash works harder for you behind the scenes.

Invest in CDs

If you’re sitting on a sizable amount of unclaimed money, there’s a good chance you won’t need to tap it right away. Instead of letting that cash sit idle in a standard checking account, you might consider putting some of it into certificates of deposit (CDs).

CDs lock your money in for a set period of time — anywhere from a few months to several years — but they typically offer higher interest rates than traditional checking or savings accounts. That means your cash can quietly work harder for you in the background.

You can find higher-yield options that work for you through CD Valet.

The platform tracks over 40,000 verified rates from FDIC-insured banks and NCUA-insured credit unions nationwide. Unlike other websites, they show every publicly available rate, ensuring you have a comprehensive view of the market.

Plus, their CD rates are updated continuously, so you can shop, compare and open CDs with ease.

Invest in multi-bagger stocks

For those willing to take on a bit more risk, putting some of that idle money into growth stocks could also help build your net worth over time.

Platforms like Moby can help you identify strong, long-term investments backed by advice from former hedge fund analysts.

In four years, and across almost 400 stock picks, Moby’s recommendations have beaten the S&P 500 by almost 12% on average.

Moby’s team spends hundreds of hours sifting through financial news and data to provide you with stock and crypto reports delivered straight to you. Their research keeps you up-to-the-minute on market shifts, and can help you reduce the guesswork behind choosing stocks and ETFs.

Moby offers a 30-day money-back guarantee, so you can sign up and see whether their recommendations align with your financial goals. Plus, their reports are easy to understand for beginners, so you can become a smarter investor in just five minutes.

Consult an advisor

If these steps feel overwhelming, it may help to consult a professional. A fiduciary financial advisor can help you build a financial plan tailored to your goals — whether that means investing extra cash, paying down debt, or planning for long-term growth.

You can find a vetted FINRA/SEC-registered expert near you through Advisor.com.

Advisor.com does the heavy lifting for you, vetting advisors based on track record, client ratios, and regulatory background.

All you have to do is enter a few details about your finances and goals, and Advisor.com’s AI-powered matching tool will connect you with a qualified expert near you for free.

The best part? Advisor.com lets you set up a free initial consultation, with no obligation to hire, to see if they’re the right fit for you.

— With files from Rudro Charkrabarti

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