While having different bank accounts for different purposes is a recommended things, some people tend to have way too many and sometimes even forget where they parked their money. Diversifying your portfolio and taking advantage of the different conditions banks offer is only a good thing if you actually use those accounts. If you do not use your bank accounts, to be compliant with the law, banks like Wells Fargo will automatically close them and turn your money over to the state.
This of course does not mean that your account will be immediately deactivated if you do not use to for a month or two, but if your account has no activity on it (no check-ins, no deposits, no outgoing transactions, no bills paid from it, etc.) for more than a year, more often than not 16 months, your account may be at risk of being deactivated.
This is not a new thing that Wells Fargo is implementing, it is completely in compliance with state law, which discourages money sitting unused and untouched for long periods of time as it considers it abandoned. This is also the reason why every year the IRS encourages taxpayers to review all their bank accounts to ensure that they are not underreporting income or benefits from investments.
But what is really considered an inactive account by Wells Fargo?
An account is defined as inactive when there are no deposits, withdrawals, payments, or other customer-initiated transactions for a certain period. It is important to note that automatic transactions happening from the account do not count as customer-initiated transactions as most of them are the “set it and forget it“ type of transaction.
Before declaring the account as Inactive, it is usually declared as “dormant” which is the previous step in the journey and you should get a notification from Wells Fargo explaining that your account has not been used in a period of time and the steps that you should take to “wake it up”, namely contact the bank and assure them that you do know the account exists and that you will make more of an effort to use it.
But if those dormancy notifications do not reach you, past a certain point your account will be considered as inactive and Wells Fargo will begin the process of closing the account and hand the money over to the government as unclaimed property. Let us be very clear. You do not want this to happen, as reclaiming that money is quite time consuming and complicated. You will need to file a lot of paperwork to prove the money was yours and was not abandoned and it will take even more time for the government to review it, get back to you and re deposit it into your account.
The easiest way for none of this to happen is to not let your account lapse. Any customer-driven transaction like logging into your account, transferring funds, making a small purchase, or depositing a minimal amount is enough o not trigger the inactivity timer, and it will only take a few minutes of you logging in and caring for the account to not let your hard earned money go.
Although we have stated that the bank will notify you at every step, if it is an old account you may not have enough time to react or their personal information about you might not be up to date. Additionally, some things can fall through the cracks, so do not depend on Wells Fargo notifying you of your obligation and take a proactive approach to your finances and know which accounts you could potentially close.