A dormant account refers to a bank account or financial account that has been inactive for a specific period, usually between 12 to 24 months, depending on the bank’s policy.
Inactivity means no deposits, withdrawals or any kind of customer-initiated transactions. Once an account is classified as dormant, certain operations are restricted until the customer reactivates it.
Dormant Account Meaning in Banking Terms
The dormant account is a sleeping or inactive account. Financial institutions label it dormant to protect both the customer and the bank from potential fraud or misuse.
For example, if an individual forgets about a savings account and does not make any transactions for over a year, the bank may move it to dormant status.
What Happens to a Dormant Account Credit Card?
If a dormant account credit card remains unused for a long period, the issuer may temporarily suspend it. Continued inactivity might even lead to the cancellation of the card.
This helps the institution manage risk and reduce exposure to unauthorised activity. Customers are usually notified before such actions are taken.
Are There Any Dormant Account Charges?
Yes, banks may levy dormant account charges to cover administrative and maintenance costs associated with inactive accounts.
These charges vary by institution, so customers should review their bank’s policy to avoid unnecessary fees.
How to Activate a Dormant Account?
Understanding how to activate a dormant account is straightforward. The customer can visit the bank branch or use internet banking to submit a reactivation request.
Usually, a small transaction like a deposit, withdrawal or fund transfer is enough to reactivate it. Providing valid identification and completing KYC verification might also be required.
If you opened a savings account in 2020, stopped using it in 2021 and did not perform any transactions till 2023, your bank may mark it as dormant. A single transaction or KYC update can bring it back to active status.
