He warned seniors that savings accounts could be closed as dormant, despite the benefits
My cousin called me in a panic last week. As a retiree, she put her savings (a six-figure sum) into a fund Savings account With the credit union.
This was her life savings, and she received quarterly statements showing monthly interest deposits. She watched her balance grow.
In its Q3 2025 statement, all seemed well. But when she received her statement for the fourth quarter of 2025, the account was marked as closed.
The bank account you rely on may be closed due to an unknown rule. (Istock)
She couldn’t believe it. What happened to the account and where is her money?
When she called the credit union, they said her account was closed due to inactivity. They closed it as a dormant account and… Send money to the statea process known as “delegation” (an appropriate name, given the circumstances).
She didn’t understand. There was activity from the financial institution making interest deposits every month.
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Then I called the state and they said they didn’t have the money; It was also not on the website for the unclaimed property.
So, what happened?
This story is a red flag for everyone, but especially for seniors or soon-to-be retirees who put their money in their savings and don’t do anything with it.
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If you, as an account holder, do not have owner-initiated activity on your financial accounts — that is, activity you do personally, such as making a deposit or withdrawal, updating your information, contacting the institution, etc. — and you believe you can only collect interest, you put your account at risk of closure. Automatic interest postings do not count towards keeping the account active. In Illinois, the current dormancy period is three years (although it varies by state). Simply charging interest without any interaction on the part of the owner can result in the account being classified as dormant.
Although my cousin was receiving deposits and making withdrawals on a regular basis, the credit union initiated those transactions, not her. Putting her savings into safekeeping is what ultimately puts her money at risk of being sent to the state.
When she called the credit union, they said her account was closed due to inactivity. They closed it as a dormant account and sent the money to the state, a process known as “conveyancing” (an appropriate name, given the circumstances).
If the institution believes the account is dormant, the institution is supposed to conduct due diligence and contact you (eg via mail) before transferring funds. The credit union said they mailed a closing notice, but it was not sent via certified mail, and my cousin never saw it. She has only received this final notice that the account has been closed.
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Of course, they could have called her or made more of an effort to contact her, but they didn’t.
The institution is then supposed to send the money to the state, but it appears that this process may take some time. In my cousin’s case, it was sent in late October, and three months later, the state still couldn’t explain it.
Note that currently, transferred funds are held indefinitely until the owner can claim them (usually via the state treasurer’s unclaimed property office and website). However, they must go through the state’s administrative process first.
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Because the state did not have a record of the transfer when contacted, the Illinois State Treasurer provided a form that we then sent to the credit union to receive specific information about when the funds would be redirected. It took me getting involved to find the right person on staff to acknowledge receipt and compliance with this request.
Meanwhile, this scenario caused my cousin a great deal of consternation, as you can imagine. I’ve also been missing three months of higher interest payments and counting due to this scenario, and we’re waiting on word from the state to see if, with the new information, they can locate and deliver the money.
What can you do to avoid the same scenario?
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First, make sure your bank or credit union is insured with the FDIC or NCUA, respectively. Make sure each of your accounts does not exceed the insurance limit ($250,000 per depositor, per insured institution, per ownership class.) Divide the accounts so that each is covered if you exceed the limit on any account.
This story is a red flag for everyone, but especially for seniors or soon-to-be retirees who put their money in their savings and don’t do anything with it.
Second, look up Authorization laws in your state. Even if the time period mentioned is longer than one year, I recommend making at least one transaction every six months to keep your account active and in good standing.
Next, review your data for all your accounts regularly and look for any unusual activity, notifications, and the like.
I would also recommend that you work with a financial institution that has a branch that you can walk into. Establish a relationship with employees so that you have an internal ally to help you.
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If you are ever fired by customer service, ask a trusted friend or relative to help you go through the process. The credit union fired my cousin until I contacted her by phone as their representative.
In our first interaction, I also told the customer service staff in advance that I was recording the call for our records, so that I could make the recording transparent (recording laws vary by state). This had the dual benefit of letting them know it was serious and recorded, and it also created an audio recording that we could use in the future if the situation escalated.
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I hope more awareness is spread and states consider changing this ridiculous rule that creates a burden, especially for retirees and other seniors who want to keep their savings as untouched money.
Savings accounts are meant to be for saving, and financial institutions are meant to be trusted. In today’s day and age, you need to carefully keep track of your hard-earned money before it ends up being lost. While the funds are refundable if surrendered, preventative efforts can prevent you from dealing with the time, effort and issues involved in the process.
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