Banks can charge dormancy fees, but the rules depend on your bank and your state

Yes, most banks can charge you a fee for keeping an account inactive. The fee is usually called a dormancy fee, inactivity fee, or maintenance fee, and it ranges from $5 to $25 per month depending on the bank. Some banks waive the fee if you meet certain conditions—like keeping a minimum balance or setting up direct deposit—while others charge it no matter what. A few states have laws that limit or ban these fees entirely, so what your bank can charge you depends on where you live and which bank you use.

The key difference is between a dormancy fee (charged because the account is inactive) and a regular maintenance fee (charged to all accounts, active or not). Banks are more likely to charge dormancy fees on savings accounts and money market accounts than on checking accounts, though it varies by institution.

Key Takeaways

  • Dormancy fees typically range from $5 to $25 per month and are charged when you do not use your account for a set period, usually 6 to 12 months.
  • Some states, including California, Illinois, and New York, restrict or prohibit dormancy fees on certain account types.
  • You can often avoid the fee by making a deposit, withdrawal, or transfer, or by setting up automatic payments or direct deposit.
  • If fees have already been charged to your account, you can contact your bank to request a reversal, especially if you were not notified about the policy.

How dormancy fees work and when banks charge them

A dormancy fee is charged when your account sits unused for a specific length of time. Most banks define "inactive" as no deposits, withdrawals, or transfers for 6 to 12 months, though some use shorter or longer windows. Once that period passes, the bank begins deducting the fee monthly until you use the account again or close it.

The fee is not applied to all account types equally. Savings accounts and money market accounts are the most common targets for dormancy fees. Checking accounts rarely carry them, because people tend to use checking accounts regularly. Some banks charge dormancy fees on certificates of deposit (CDs) or individual retirement accounts (IRAs), though this is less common.

Banks justify these fees as a way to cover the cost of maintaining inactive accounts in their system. Whether that cost is real or inflated is a separate question—the point is that the fee is legal in most places and most banks do charge it.

State laws that limit or ban dormancy fees

A handful of states have passed laws restricting what banks can charge for dormant accounts. California prohibits dormancy fees on savings accounts entirely. Illinois bans them on accounts held by minors. New York restricts them on certain types of accounts and requires banks to notify customers before charging. Other states have similar rules, though the specifics vary widely.

The safest way to know what applies to you is to check your bank's fee schedule or call the bank directly and ask whether dormancy fees are charged in your state. If your state does restrict these fees, mention that when you contact the bank—it may speed up a reversal if fees have already been charged.

How to avoid dormancy fees on your account

The simplest way to avoid a dormancy fee is to use your account regularly. A single deposit, withdrawal, or transfer every 6 to 12 months (depending on your bank's definition) will reset the inactivity clock and keep the fee from being charged. You do not need to move large amounts of money—even a small transfer counts as activity.

Some banks waive dormancy fees if you meet other conditions. Setting up direct deposit, maintaining a minimum balance (often $500 to $1,000), or enrolling in paperless statements can all prevent the fee from being charged. Check your bank's fee schedule to see which options are available to you.

If you are reactivating an old account, ask the bank whether they will waive any dormancy fees that have already accumulated. Many banks will reverse a few months of fees, especially if you were not notified about the policy or if you are bringing the account back into active use.

What to do if dormancy fees have already been charged

If you discover that your bank has charged dormancy fees without your knowledge, contact the bank and ask for a reversal. Call the customer service number on your bank statement or visit a branch in person. Explain that you were not aware of the policy, or that you did not receive notice before the fees were charged.

Banks often reverse one or two months of dormancy fees as a courtesy, especially if you have been a customer for a long time or if the account balance is now very low because of the fees. If the bank refuses, ask to speak with a supervisor or file a complaint with your state's banking regulator or the Consumer Financial Protection Bureau (CFPB).

Keep records of all communication with the bank—dates, names of representatives, and what was said. If you end up filing a complaint, this documentation will be useful.

Dormancy fees versus other account maintenance charges

It is important to distinguish between a dormancy fee and a regular maintenance fee. A maintenance fee is charged to all accounts, whether they are active or not. A dormancy fee is charged only to inactive accounts. Some banks charge both—a maintenance fee every month, plus an additional dormancy fee if the account goes unused.

When you review your bank statement, look at the fee description to see which type you are being charged. If it says "dormancy fee" or "inactivity fee," you may be able to avoid it by using the account. If it says "monthly maintenance fee" or "account maintenance fee," you will need to meet the bank's other conditions (like maintaining a minimum balance) to avoid it.

Frequently Asked Questions

How long can a bank account sit inactive before they charge a dormancy fee?

Most banks charge dormancy fees after 6 to 12 months of inactivity, though some use different timeframes. Check your bank's fee schedule or account agreement to find the exact period. Once that time passes, fees are usually charged monthly until you use the account again.

Can a bank close my account for inactivity without charging fees?

Yes. Some banks close inactive accounts after a certain period—often 12 to 24 months—without charging fees. Others charge fees instead of closing the account. Your bank's policy should be in your account agreement or fee schedule. If your account is closed, any remaining balance will be returned to you.

If I reactivate my dormant account, will the bank stop charging fees immediately?

Yes. Once you make a deposit, withdrawal, or transfer, the account is no longer considered inactive and dormancy fees should stop. However, any fees that were already charged will not be reversed automatically—you will need to contact the bank and request a reversal.

Do dormancy fees apply to joint accounts?

Yes, dormancy fees can be charged to joint accounts if neither account holder uses the account for the required period. If one person on the account makes a transaction, it typically resets the inactivity clock for both owners.

What happens if my account balance drops to zero because of dormancy fees?

If fees reduce your balance to zero or below, your account may go into overdraft or be closed. Contact your bank immediately to explain the situation and request a fee reversal. Banks sometimes waive fees in these circumstances to avoid further damage to your account.