Most Americans believe that putting money with a trusted bank or credit union is safe — that they can lock it in and forget about it. But if you do, your money could disappear from your account!
My cousin called me last week in a panic. As a retiree, she had put her savings (a six-figure sum) in a savings account at a credit union.
This was her life’s savings, and she received quarterly statements showing monthly interest deposits. She saw her balance grow.
Everything looked good on its Q3 2025 statement. But when she received her statement for the fourth quarter of 2025, the account was marked as closed.
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The bank account you’re counting on could be closed because of a little-known rule. (iStock)
She couldn’t believe it. What happened to the bill and where was her money?
When she called the credit union, they said her account had been closed due to inactivity. They had closed the account 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 every month with interest deposits.
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Then she called the state, and they said they didn’t have the money; it was also not listed on their website for unclaimed properties.
What happened?
This story is a red flag for everyone, but especially for seniors or soon-to-be retirees who put money in their savings account and do nothing with it.
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As an account holder, if you do not perform owner-initiated activity on your financial accounts (i.e. activities that you personally undertake, such as making a deposit, withdrawing funds, updating your information or contacting the institution, etc.) and think that all you can do is collect interest, you run the risk of having your account closed. Automatic interest entries do not count towards keeping the account active. In Illinois, the current dormancy period is three years (although it varies by state). Simply collecting interest without any owner-initiated interaction may result in the account being classified as dormant.
Even though my niece received deposits and withdrawals regularly, these were initiated by the credit union, not her. By putting her savings in escrow, she ultimately risked being sent to the state.
When she called the credit union, they said her account had been closed due to inactivity. They had closed the account as a dormant account and sent the money to the state, a process known as ‘escheatment’ (aptly named, given the circumstances).
If the institution believes the account is dormant, the institution is expected to conduct due diligence and contact you (e.g. via letter) before misappropriating funds. The credit union said they sent a closing notice, but it wasn’t sent by certified mail, and my cousin never saw it. She only received the final message that the account had been closed.
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Of course, they could have called her or tried harder to connect, but they didn’t.
The institution is then expected to send the money to the state, but that process can apparently take some time. In my cousin’s case, it was shipped in late October, and three months later the state couldn’t account for it.
Please note that currently embezzled funds are held indefinitely for the owner to claim (usually through the State Treasurer’s Unclaimed Property office and website). But they must first go through the state’s administrative process.
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Because the state had no record of the transfer when we were contacted, the Illinois State Treasurer provided a form that we then sent to the credit union to receive specific information about when the funds were transferred. I had a hard time finding the right person on staff who could confirm receipt and compliance with this request.
Meanwhile, this scenario has caused my cousin a lot of panic, as you can imagine. She also lost her higher value interest payments for three months due to this scenario, and we are waiting to hear from the state to see if they can locate and transfer the money with the new information.
What can you do to avoid the same scenario?
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First, make sure 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 property category). Divide the bills so that if you exceed the maximum on any one bill, they are all covered.
This story is a red flag for everyone, but especially for seniors or soon-to-be retirees who put money in their savings account and do nothing with it.
Second, look up the expiration laws in your state. Even if the stated period is longer than a year, I recommend that you make at least one transaction every six months to keep your account active and in good standing.
Then regularly check your statements for all your accounts and look for unusual activities, notices and the like.
I would also recommend working with a financial institution that has a walk-in branch. Build a relationship with staff so you have an internal ally to help you.
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If at any point you are dismissed by customer service, ask a trusted friend or family member to help you navigate the process. The credit union fired my cousin until I called her on the phone as her representative.
During our initial interaction, I also informed the customer service staff in advance that I was recording the call for our records so that I could make a recording transparently (recording laws vary by state). This had a double benefit: it let them know this was serious and official, and it also created an audio recording that we could use in the future if the situation escalated.
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I hope that more awareness will arise and that states will consider changing this ridiculous rule, which creates a burden, especially for retirees and other seniors who want to keep their savings as untapped money.
Savings accounts are for saving, and financial institutions should be trusted. Nowadays, you need to diligently keep track of your hard-earned money before it gets lost. Although money can be recovered if it is embezzled, preventative efforts may leave you unable to cope with the time, effort, and hassle that this process entails.
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