Most Americans believe that putting money with a trusted bank or credit union is safe — that they can set it and forget it. But doing that could just make your money disappear from your account!
My cousin called me in a panic last week. A retiree, she had put her savings (a six-figure sum) into a savings account with a credit union.
This was her life’s savings, and she received quarterly statements that showed monthly deposits of interest. She watched her balance grow.
On her third quarter of 2025 statement, everything looked fine. But when she received her fourth quarter 2025 statement, the account had been marked closed.
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She couldn’t believe it. What happened to the account, and where was her money?
When she called the credit union, they said her account had been closed for inactivity. They had closed it as a dormant account and sent the money to the state, a process known as “escheatment” (aptly named, given the circumstances).
She didn’t understand. There was activity from the financial institution with interest deposits every month.
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She then called the state, and they said they didn’t have the money; it also was not on their unclaimed property website.
So, what happened?
This story is a red flag for everyone, but especially for seniors or soon-to-be retirees who put money into savings and don’t do anything with it.
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If you, as an account holder, do not have owner-initiated activity in your financial accounts — that is, activity you personally undertake, such as making a deposit, withdrawal, updating your information, or contacting the institution, etc. — and think you can just collect interest, you put your account at risk for closure. Automatic interest postings do not count toward keeping the account active. In Illinois, the current dormancy period is three years (though it varies by state). Simply collecting interest without any owner-initiated interaction can lead to the account being classified as dormant.
Even though my cousin received deposits and had withdrawals regularly, those were initiated by the credit union, not her. Putting away her savings for safekeeping is what ultimately put her money at risk for being sent to the state.
If the institution believes the account is dormant, the institution is supposed to do due diligence and contact you (such as via a mailed letter) before escheating funds. The credit union said they mailed a notice of closure, but it was not sent via certified mail, and my cousin never saw it. She only received that final notice that the account was closed.
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Of course, they could have called her or tried harder to connect, but they did not.
The institution is then supposed to send the money to the state, but that process can apparently take a while. In my cousin’s case, it was sent in late October, and three months later, the state couldn’t account for it.
Note that currently, escheated funds are held indefinitely for the owner to claim (usually via the state treasurer’s unclaimed property office and website.) But, they have to 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 the credit union to receive specific information on when the money was forwarded. It took me getting involved to find the right person on staff to acknowledge their receipt and compliance with this request.
In the meantime, this scenario has caused my cousin a great deal of panic, as you can imagine. She has also lost her higher-value interest payments for three months and counting because of this scenario, and we are awaiting word from the state to see if, with the new information, they can locate and turn over the funds.
What can you do to avoid the same scenario?
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First, make sure that your bank or credit union is insured by the FDIC or NCUA, respectively. Make sure that each of your accounts does not exceed the insurance limit ($250,000 per depositor, per insured institution, per ownership category.) Divide up accounts so each is covered if you exceed the maximum in any account.
Second, look up the escheatment laws in your state. Even if the listed time period is longer than one year, I recommend that you make at least one transaction every six months to keep your account active and in good standing.
Next, review your statements for all your accounts regularly and look for any unusual activity, notices and the like.
I would also recommend that you work with a financial institution that has a branch you can walk into. Establish a relationship with the staff so that you have an internal ally to help you.
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If you are being dismissed by customer service at any point, have a trusted friend or relative help you navigate the process. The credit union dismissed my cousin until I called with her on the phone as her representative.
In our first interaction, I also let the customer service staff know upfront that I was recording the call for our records, so I could transparently do a recording (recording laws vary by state). That had a double benefit of letting them know this was serious and on the record, and it also created an audio record we could use in the future if the situation escalated.
I hope that more awareness will be made and states will consider changing this ridiculous rule that creates a burden, particularly for retirees and other seniors who want to keep their savings as untouched money.
Savings accounts are supposed to be for saving, and financial institutions are supposed to be trusted. In today’s day and age, you need to diligently keep track of your hard-earned money before it ends up missing. While funds are recoverable if escheated, preventative efforts can keep you from dealing with the time, effort and issues of this process.
