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When a CD becomes ‘unclaimed’

By Claes Bell, CFA · Bankrate.com
Monday, December 5, 2011
Posted: 4 pm ET

It's a little ironic that while many CD investors are leaving no stone unturned searching for higher CD rates, millions of dollars worth of CD balances are just sitting unclaimed at banks and in state coffers, waiting for their owners to show up.

It's easy for a CD to become unclaimed property. A CD owner can die without specifying a beneficiary or informing their heirs of the asset's existence. Or a saver can put some money away in a CD for the long term, preferring to let it roll over continuously.

However it happens, once a CD has lain dormant for a certain number of years, most states require banks to turn those assets over to the states. Each state has its own laws governing how unclaimed property is treated, but most likely, the state will take the balance of the matured CD and hold it until the rightful owner turns up.

To avoid having your CD balance spirited away by the state, where you'll be required to jump through bureaucratic hoops to get it back, here are some tips:

  • When you move, be sure to update your address with every one of your banks, not just the bank that holds your transactional accounts.
  • Open any and all communications from banks where you hold CDs. Sometimes a CD account can appear to be unclaimed because of bank clerical errors, but banks are required to send you notification before they turn your CD balance over to the state.
  • Keep a list of all your CD accounts and account numbers in a place your family would know to look.

If you think you or a relative may have an unclaimed CD languishing in state coffers, the National Association of Unclaimed Property Administrators offers links to states' searchable databases of unclaimed property at unclaimed.org.

What do you think? Have you ever had to deal with a CD being confiscated by a state as unclaimed property?

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