Many Americans think their money is safe in trusted banks or credit unions, and they often assume it’s a simple, set-it-and-forget-it situation. But this mindset might actually put their funds at risk.
Just last week, my cousin reached out to me in a panic. She’s a retiree who had invested her life savings—over six figures—into a credit union savings account. She was used to getting her quarterly statements, seeing interest deposits regularly, and occasionally watching her balance grow.
Everything seemed normal in her statement for the third quarter of 2025. But then, when she got her fourth-quarter statement, she saw that her account was marked as closed, which left her utterly bewildered.
She was in shock—where was her money? After calling the credit union, they informed her that her account had been categorized as dormant due to inactivity and the funds had been transferred to the state. This is part of a process called “escheatment”—which seems fitting given the circumstances.
Confused, she pointed out that interest payments had been credited monthly. How could they mark it inactive?
Then, when she contacted the state for answers, they told her that her funds were nowhere to be found—not even listed on the Unclaimed Properties website. The whole situation raised serious questions.
This experience serves as a warning for many, particularly seniors and pre-retirees who believe their savings are secure simply by letting it sit.
If you believe you can just collect interest without engaging with your account—like making deposits, withdrawals, or even just updates—you might be at risk of your account being closed. In Illinois, for instance, an account is considered dormant after three years without any owner-initiated activity, which often includes just collecting interest.
Despite my cousin regularly receiving interest and occasional withdrawals, those actions were initiated by the credit union, not her. Simply keeping her savings there ended up jeopardizing her funds, ultimately leading to potential transfer to the state.
When an account is deemed dormant, financial institutions are required to reach out to the account holder—usually via mail—before they handle the funds. The credit union claimed they sent a notice about the closure, but it wasn’t sent by certified mail, and my cousin never received it. She only got a final notification stating the account had been closed.
Sure, they could have called her or made more effort, but that didn’t happen.
The next step for the agency is transferring the money to the state, a process that can take a while to complete. In my cousin’s case, the funds were sent in late October, and by now, three months later, the state couldn’t provide an explanation.
It’s crucial to note that escheated funds are technically held indefinitely, waiting for the owner to claim them, typically through the State Treasurer’s Office of Unclaimed Property, but they first have to go through the state’s administrative process.
After we reached out to the state, there was no record of that transfer, so we sent a request to the credit union for specific details about when it occurred. I had to get involved until I finally located the right person who would acknowledge our request.
This whole ordeal understandably created a lot of anxiety for my cousin. She had also missed out on significant interest earnings for three months during this mess and was left waiting for updates from the state about recovering her funds.
So, how can others avoid finding themselves in a similar situation?
First, verify that your financial institution is insured by the FDIC or NCUA and ensure that your accounts don’t go over the insurance limits ($250,000 per depositor per institution). If you have larger amounts, consider spreading them across multiple accounts.
Next, familiarize yourself with your state’s laws on escheatment. Even if your state has a longer dormancy period, a good practice is to make at least one transaction every six months to keep your account active.
It’s wise to regularly review your account statements as well; stay on the lookout for anything unusual.
Additionally, it’s beneficial to choose a bank or credit union with a nearby branch. Establishing a relationship with staff can be very helpful, ensuring you have allies within your financial institution.
If you ever face issues with customer service, don’t hesitate to have a trusted friend or family member involved. In this case, my cousin had a lot more trouble until I stepped in on her behalf.
During my initial call with customer service, we informed them that we were recording the conversation for our own records. This not only added a layer of seriousness to the interaction but also created an audio record that could be useful if the situation escalates later.
Ideally, as awareness grows, we hope states will rethink these burdensome rules, especially affecting retirees who strive to keep their savings intact.
A savings account should be a place to securely store funds, and a financial institution ought to be reliable. In today’s landscape, it’s essential to actively manage your finances to prevent losing your hard-earned money. Sure, you may get any mislaid funds back, but navigating a recovery can often be an overwhelming and frustrating experience.
