Are banks required to pay interest on inactive or dormant accounts?

The concept of whether banks are required to pay interest on inactive or dormant accounts can vary based on specific regulations and bank policies. However, under the Truth in Savings Act (TISA), most financial institutions are indeed required to disclose their policies regarding the interest earned on accounts, including dormant accounts, at the time the account is opened.

TISA mandates that banks provide clear and accurate information about the annual percentage yield (APY) and the terms of interest payments. If a bank chooses to carry a policy of paying interest on dormant accounts, they must adhere to that policy and disclose it to account holders. Consequently, in practice, it is common for banks to provide interest on such accounts, but they must clearly define their terms and conditions.

This requirement aligns with TISA's overarching goal to promote transparency and ensure consumers are adequately informed about their accounts. Therefore, it is accurate to state that banks generally are obligated to pay interest on inactive accounts, assuming the account terms allow for it.