What happens if I don't close my unused bank account?

Consequences of Leaving Unused Bank Accounts Open

Maintaining inactive bank accounts may seem harmless, but it can lead to significant consequences that can impact your financial well-being. Here’s an overview of what happens when you neglect to close unused bank accounts:

1. Account Dormancy and Freeze

When an account remains inactive for an extended period (typically one to two years), it is considered dormant. Regulatory authorities, such as the FDIC or CFPB, often trigger a freeze on these accounts to protect against potential fraud or money laundering activities.

2. Limited Access to Funds

Once an account becomes dormant, you may lose access to your funds. You won’t be able to withdraw or transfer money online, write checks, or use a debit card. This can create inconvenience and financial hardship if you rely on the account for expenses or emergencies.

3. Penalties and Fees

Some banks may impose penalties or fees on dormant accounts. These charges can accumulate over time, potentially depleting the account balance. You may also incur additional fees if the account becomes overdrawn due to inactivity.

4. Account Closure

If the account remains inactive for an extended period (typically five to seven years), the bank may close it permanently. This can result in the loss of any remaining funds in the account.

5. Negative Impact on Credit

Leaving unused bank accounts open can negatively impact your credit score. If an account is closed for inactivity, it may be reported as a “closed by creditor” on your credit report. This can lower your credit score and make it more difficult to obtain loans or credit cards in the future.

Recommendation

To avoid these consequences, it is crucial to close any unused bank accounts promptly. Contact the bank and request the account be closed. If the account has already been designated as dormant, it may require additional steps to reactivate or close it. Act promptly to protect your funds and maintain a healthy financial standing.