Chase Penalizes Customers For Saving Money Too Long

Savings accounts, they’re where you save money. You put money in and leave it there. That’s the whole point, right? Well, at Chase, if don’t deposit or withdraw money into it for 3 months, it becomes “inactive,” blogs Tom Drapeau. That means you can’t make a wire transfer out of it. Annoying, but you can change to “active” by depositing or withdrawing money, and if you want to avoid “inactive” status, you could set up an automated transfer to put in $1 and take out $1 of it.

It could be worth the trouble, because if you let it “over ferment,” the account could get classified as “dormant,” and then the money magically disappears and goes to the state. We’ve heard some pretty asinine bank policies, but labeling an account as inactive after only 3 months definitely takes the ass cake.

Say what, Chase? [blog.tdrapeau.com] (Thanks to Eliot!)
(Photo: GearBits)

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  1. GreatCaesarsGhost says:

    That magic disappearance of funds to the state? It’s called escheatment. And it’s the law, not bank policy. Take off the tinfoil hat.

  2. djconnor says:

    Why reward a company for being perverse with its incentives? Furthermore, why would anyone in this day and age save without getting a return of at least 4.5%? ING-direct– emigrant…

    This should be a moot point.

  3. Tzepish says:

    @GreatCaesarsGhost: I’ve had a savings account with another bank (it’s actually Bank of America – NOT RECOMMENDED for other reasons) that I haven’t touched for at least a year, and this hasn’t happened to me.

    It’s bank policy, not the law.

  4. ihateauditions says:

    escheatment is supposed to occur if you’ve died without a will or an estate. It’s not supposed to occur if you don’t put any money into your savings account for a year.

    I have several savings accounts that have been open and inactive for years. The only result I’ve had from that is an annual tax form, for the interest.

    Nobody’s ever contacted me and said ‘btw, if you don’t churn your account a bit, we’re going to escheat it’

  5. RottNDude says:

    What else would you expect from the company that arbitrarily raises interest rates on their cards from 3 to 30% overnight with no explanation other than “the contract says we can”.

  6. squikysquiken says:

    @Tzepish: The money going to the state, it’s state law. In IL, the money is turned over to the state after 5 yrs and the state “keeps it” forever until you claim it. The law includes some provisions about the bank having to contact the owner before doing it.

    Making the account inactive, that’s probably bank policy. I’m not sure what that guy is complaining about because he got his money. Blocking wires from accounts that had no activity for a long time sounds like a good way to protect customers. You don’t want them to come back 2 yrs later and realize someone stole all their savings.

    The comment about the $15mn also makes me think the rep was making stuff up as he goes.

  7. sleze69 says:

    This fact alone should be enough for anyone with a chase savings account to dump your cash into a high yield ING or HSBC savings ccount.

  8. ncboxer says:

    Yes, money does get turned over to the state after an account is inactive for awhile- but making an account inactive after 3 months sounds pretty stupid in my book. Yes, he was able to make it active and get his money, but it does seem one more hassle. Does anyone know if the bank stops giving interest if an account becomes inactive? If so, this could be the reason Chase is moving so fast into inactive.

    It is doubly stupid if you have more than one account with a bank and they “choose” to make one inactive after a certain period of inactivity. For instance at my credit union I have 3 accounts- one I have never touched in 10 years, one is active every week, one is active several times a year. Now if all I had was the one account that I hadn’t touched in 10 years- yeah, I can see how that would become inactive and turn over to the state, but taken into context with the other accounts, it should be active as long as they are.

  9. smarty says:

    Who uses Chase savings? I mean 3.51% APY in their best public money market only if you have $100k+! Regular Chase Savings is 0.20%! Instead, use one of the online banks offering rats of 4% and higher.

    Another good idea is what Ben said, just set up automatic deposits. Use it to help save for a trip, or create an emergency fund.

  10. smarty says:

    Errr, not rats, but rates.

  11. JKinNYC says:

    I work at a bank chartered in NY state. Accounts go dormant at 18 months, and are then sent for escheatment. That’s the law here.

    The bank’s policy is to consider accounts inactive after 9 months. This puts the account effectively on a Post no Transactions status, without client contact. Of course, a phone call will rectify that.

    Inactive status is only a policy issue. Dormancy is a legal one at least at my bank.

  12. parnote says:

    Chase doesn’t have a corner on this activity. My bank, Commerce Bank in Kansas City (Commerce Bancshares) also has this asinine policy. So every 3 months or so, I transfer $1 from my checking account into my savings account. Problem solved! And it’s all done online, in less than 5 minutes.

  13. sensible-jack says:

    Escheatment is a law. It is not a bank policy. Banks create the policies that comply with the law. Every bank has to do this, but their methods vary. Most banks will, or have to, send out notification to your address on file and if after so long the bank never hears from you, it goes to the State.

    You can always reclaim this money if you let the bank know, usually by phone, that you still exist, and even when it has gone to the state. I’m surprised you didn’t do your research on this one.

    Do you think if it was up to the bank that the funds would go to the State? NO! They would keep it silly.

  14. rdm7234 says:

    That doramncy thing isn’t a Chase policy–it’s a state policy.

  15. Havok154 says:

    @RottNDude:
    Fixed APR FTW.

  16. floofy says:

    es’cheat’ment is right.

  17. Musician78 says:

    Damn. Corporate America has found yet another way to make a dollar.

  18. ry81984 says:

    Chase Bank is terrible.
    I just opened a checking and saving account with them 2 months ago. The savings account would have a zero balance until August 17 when my college grants got deposited. I spefically explained the situation to the Bank Manager who signed me up. He said I could have zero in the account for as long as I want.

    Then the day of the direct deposit, I find my saving account was deleted. The Chase cashier said if my account went 30 days with 0 they delete it and their is no way for them to reopen the account.
    I told them to reopen the same account as this problem happened because their Bank manager lied to me. I told them if they opened the account I would stay as their customer.
    They refused to keep me as a customer, so I opened a ~5% savings with HSBC direct.

    IF YOU WANT YOUR MONEY SAFE, THEN NEVER OPEN A SAVINGS ACCOUNT WITH CHASE.

  19. RandomHookup says:

    Could I have some Starbucks with my ass cake?

  20. skittlbrau says:

    @Musician78: Nope, that would be the state. When the funds are escheated, they are sent to the state of last residence of the account owner, and the state holds these funds for the owner.

    I work for a mutual fund company, and we have a similar policy for escheatment. Every company has to comply with this by law.

    There’s no telling what the state has in your name. When I worked @ ford we had to escheat peoples paychecks all the time because they never came to pick them up and never called to tell us where to send them.

  21. awcrap says:

    Six months back I had a Chase Checking (w/ direct deposit) and a Chase Savings account. I would put money in and out of savings, just to organize my money (keep me from automatically spending money I didn’t want to spend). I didn’t move any money around for a 3 month period (I had only $25 in my savings account). They closed my savings and put the $25 in my checking. It was annoying, but for everything else, Chase has been easy (especially in NYC).

  22. beyond says:

    Though it is inactive, it still earns interest, right? I think inactive is the wrong word, because I kind of agree with their policy. You can still deposit and withdrawal money, so the account is locked, they just prevent you from wiring money out of it.

    Right? Doesn’t sound so bad to me. You could probably just call up and wire the money by phone with Chase anyway. Sounds like a security feature. Maybe they’ve had problems with theft out of old accounts?

  23. Charybdis says:

    Inactive and Dormant are the same thing for Chase. In fact the status is actually called Inactive/Dormant, and the procedures are exactly the same.

    Dormant status protects customers from fraud. An account that isn’t used regularly is prime for abuse since customers often stop receiving statements or only receive them every six months or so, making it less likely that the fraud will be discovered in a timely manner.

    Reactivating a dormant account requires a paper credit with a signature that can be verified with one on file. No signature, no reactivation (though the deposit will still post). People at the branch can also reactive the account by running maintenance on it, but it’s usually easier to just pull that penny out of your pocket and deposit it.

    Escheatment laws vary by state, but they all involve an account with no activity for a certain period of time – usually around 10 or so years. Notices are sent out prior to closure, but if nobody shows up then the money goes to the state. Not policy – law.

    As far as Chase deleting new accounts if there’s no deposit within 30 day? That’s not actually true. I’m not saying the branch didn’t tell you that, they likely did, but the account is simply closed. Most accounts, unless specified otherwise, close at a 0 balance. Only when the account has been closed for 30 days will it change to purged status, meaning it’s still on the system but cannot be reopened. Purged accounts stay visible for months before finally being removed from the system.

  24. NoWin says:

    State auditors in Mass notoriously audit us each year (I work for a Mass bank) for accounts with no activity within 12 month period, and then will take those account names public for listing as “abandoned” faster than you can say cheese.

    If the owners do not step forward, the state gets the money.

    We post in our disclosures and notify via statement headders, that you must have some activity (even a $1.00) every 3 three months to keep the account from going in-active (at 6 months) to dormant (12 months).

    READ your disclosures people!!!!!

  25. louballs says:

    I work in a chase retail branch. And it is definitley not bank policy, it is state policy. Trust me if we could avoid this we would because its not fun for us to deal with either.

  26. markwm says:

    @parnote: Something similar to this is why I will not use Commerce as a bank ever again.
    I lived in a town with several Commerce branches and ATMs while in college, and even had a branch at the grocery store I worked at, so I opened up a savings account with them. Well, once it came time for me to move from the town, I needed to close the account. I went to a branch and said I wanted to close the account. I was informed that I had a pending deposit that included a check that was not on them, so I could not close the account until that deposit was clear.
    The check in question was only something around $50, so I said fine, and took everything but $50, in the off-chance that check did not clear. I then asked if there was a way to set the account to close after the check cleared and was informed no, I would have to come in and do that in person.
    I explained to the CSR that I was moving, and where I was moving to did not have any Commerce banks, and the nearest one would be over 2 hours away. She apologized but said her hands were tied.
    I asked if there was any way I could go ahead and sign the proper papers, then call in to close the account. She said no to that, also. So, I moved, leaving this account with a little under $100 in it and didn’t think any more of it. I continued to get statements (but to my own fault I did not look at them, choosing to pretend the account did not exist). Fast forward about three years and I get a notice from Commerce that I owe them money. I’m confused and call the customer service line. I’m informed that since my account sat dormant for a year and had less than (I think) $500, they started deducting a service charge on it. This charge was $2.75/month. That charge quickly ate away at the money I had in the account, as well as the few cents in interest it had earned in that time. As soon as the account went negative from the service fee, I was dinged with a penalty and sent the notice.
    At this point, I still could not close the account without going to a branch in person, so I had to take 4 hours just for driving (2 hours each way), plus the time I was in the branch to get the account closed, and it took much bickering to get them to not charge me the fee for going in the whole.
    While I could have handled my end of it differently, I find it ridiculous that a bank would operate under such a system and vowed to never deal with that bank again.

  27. NoWin says:

    (but to my own fault I did not look at them, choosing to pretend the account did not exist)

    Ohhh, I see, so they mail you what you they legally need to (the statements), all in order for you to make an informed decision (close it out at after the clearing and get your money), but you disregard it altogether, and then want to blame them in the long run when you did not do what you should have done much sooner each and every month when they mailed you the statement…

  28. hydrargyrum says:

    I too had the misfortune of being from St. Louis and having a Commerce Bank savings account. While at school in Chicago, I’d shuffle money around between that and my Citibank checking account often enough but upon returning from a summer abroad and discovering that Commerce Bank had actually charged! an! inactivity! fee! I immediately closed my account in the simplest possible manner: I withdrew every cent in my account. Nothing in account => good luck deducting fees… My money now makes me ~4% in a Citibank e-savings account…

  29. markwm says:

    @NoWin: As I said, “to my own fault” I should have looked at the statements. However, I had not dealt with a bank before who took a service fee from a _savings_ account for inactivity. I had been brought up to assume I could open a savings account, never look at it again, then magically have the original money, plus the $.82 in interest it had earned in 20 years when I did decide to claim it.
    What I am blaming them for is being unable or unwilling to work with me when I originally tried to make things right. I had offered to leave enough in the account to cover any outstanding unsecured amounts, in exchange for closing it then and there. I would have been willing to give up that amount at the time just to close it. My issue was with them telling me that was impossible to do, and then, when I was far enough away that physically visiting a location was impossible, deducting fees from the account because I did not actively deposit to it.
    Yes, I should have looked at my statements. However, they should have been willing to come to some agreement with me. Years later, I wound up working at a bank, and found that some of the ‘laws’ they had quoted me regarding my account weren’t laws but corporate policies. Looking back, I just chalk it up to another cost of my formative years, much like college. However, I will not use them as a bank again. Part of the whole learning experience.
    They did not turn me over to the state as an inactive account. Instead, they marked me inactive, but continued to charge fees as if I were an active account, it does not work both ways. Either they decide the account is inactive and turn it over to the state, or they treat it as active and charge fees they would charge an active account.