How your old, dormant bank accounts can cost you big

Gonzalez says if you’re in a position to close a dormant account, then do so. She encourages people to keep their financials simplified and manageable, not only because it’s good financially, but also from a security point of view.

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“Many banks have now continued to uplift and strengthen their fraud and security controls. It’s a requirement in the day and age that we live in. However, there are still instances of people where their identity has been stolen.”

If a criminal has access to your banking profile and a number of different accounts, it’s easy for them to identify a dormant account by looking at your transaction history.

“There’s very rarely ever a good reason to have a dormant account, especially if it’s going to have a significant number of funds associated with it,” Gonzalez says. “If you’re not going to be actually managing it, protecting it, just ask yourself, why?”

With bank accounts you regularly monitor, you can keep an eye on any suspect transfers. The faster you can identify suspicious activity, the greater chance you have of blocking funds from being stolen or retrieving stolen funds.

Gonzalez says people should consider what security measures a financial institution has before banking with them.“Unfortunately, in Australia, they’re not all the same. As a minimum, if you are going to be someone who banks digitally quite a bit – you’re going to be doing that on mobile, or on the go – then make sure you see multifactor authentication enabled,” she says. This could be asking you to verify yourself using face or voice ID, a fingerprint or text message.

“These additional steps can sometimes feel a nuisance, but remember they can frequently stop a hacker from getting in.” Another good sign is how easy and quick it is to contact a bank and ask for help. Time is of the essence in emergencies, after all.

A final note on dormant accounts – you can keep them open for seven years maximum. After that, if there are funds in the account, they are taken into possession by ASIC. There’s a formal process that this money can be ‘claimed’, but people need to reach out to ASIC directly to retrieve it.

Caterina Hrysomallis is a journalist specialising in health, lifestyle and personal finance.

• Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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