Fact Check: Can Your Unclaimed Money Really Earn Interest While the State Holds It? Only 2 States Pay Interest on Claims

No, most states do not pay interest on unclaimed money while they hold it. Instead, states collect interest earned on the billions of dollars in unclaimed funds sitting in their custody, keeping that interest revenue for their own budgets rather than returning it to the property owners. If you had a savings account balance that went unclaimed a decade ago, that account was likely earning interest the entire time—but that interest went to your state government, not to you. The reality is far more complicated than the title suggests: while only a handful of states have formal policies paying any interest directly to claimants, the interest that accrues on unclaimed property represents billions of dollars that rightfully belongs to individuals and businesses, not state treasuries. The claim that “only 2 states pay interest” appears incomplete based on current state policies.

Research shows that at least three states—New York, New Jersey, and Virginia—have documented interest payment policies, though each has significant limitations. New York limits interest to just five years and only for originally interest-bearing items. New Jersey calculates interest from escheating until the claim is paid. Virginia offers a flat five percent or the rate the property originally earned. None of these states pay interest for the full period the state holds the funds, and most claimants never receive interest payments at all.

Do States Earn Interest on Unclaimed Money, and Who Keeps It?
Which States Actually Pay Interest on Unclaimed Property?
New York’s Limited Interest Program: What Property Actually Qualifies?
New Jersey and Virginia’s Interest Policies: Different Approaches, Same Limitation
The Real Financial Impact: How Much Interest Do Claimants Actually Miss Out On?
The Scale of Unclaimed Funds and What Interest Should Be Returned
The Ongoing Debate Over State Interest Policies and the Path Forward
Conclusion

Do States Earn Interest on Unclaimed Money, and Who Keeps It?

States absolutely hold unclaimed funds in interest-bearing accounts and other investments. The unclaimed money sitting in state custody generates significant income: New York alone holds over $18 billion in unclaimed property as of February 2026, California holds approximately $15 billion, and Texas holds over $10.5 billion. When states invest these funds or hold them in interest-bearing accounts, they earn interest. However, this interest flows directly into state treasuries to cover administrative costs and general state budgets—not into accounts for the property owners.

This practice is entirely legal because state escheatment laws give states custody and control over unclaimed property once accounts are abandoned. A person who had a utility deposit refund of $500 that went unclaimed might see that $500 grow to $550 or more in interest over a decade, but the state gets to spend that $50. The original owner, unaware that their property was ever escheated, has no way to know that interest has been earned on their behalf. By the time they discover the unclaimed money and file a claim, the question of interest is often secondary—they’re just relieved to recover their original principal.

Do States Earn Interest on Unclaimed Money, and Who Keeps It?

Which States Actually Pay Interest on Unclaimed Property?

The title claims only two states pay interest, but state records reveal at least three states with documented interest payment policies. New York has an explicit interest-bearing property program managed by the Office of the State Comptroller. New Jersey’s unclaimed property division calculates and pays interest according to schedules derived from the state’s Division of Investment. Virginia also has interest provisions in its unclaimed property law. The discrepancy between “only 2 states” and these documented examples illustrates how little public attention these policies receive—most people, including financial professionals, don’t realize interest is paid on unclaimed money in any state.

These states are outliers. The other 47 states and Washington D.C. do not have formal policies paying interest directly to claimants, meaning billions in interest earnings remain with state governments. This creates an enormous hidden subsidy to state budgets. If the average unclaimed property account sits abandoned for 10 years earning just three percent annually, a $1,000 escheated account could generate $344 in interest that the owner never receives. Multiply that across millions of accounts nationwide, and the total amount of unclaimed interest exceeds hundreds of millions of dollars annually.

New York’s Limited Interest Program: What Property Actually Qualifies?

New York’s policy is the most developed in the nation, yet it remains highly limited. The state pays interest for a period of just five years from the date property is received into the state’s custody. Critically, interest is only paid on items that were originally interest-bearing—savings accounts, money market accounts, utility deposits with interest components, and certain court-awarded funds. If you had a dormant savings account worth $5,000 that was escheated, New York will calculate and pay interest on that $5,000 for up to five years.

However, interest stops accruing after that five-year window, regardless of how much longer the state continues to hold the money. Non-interest-bearing property—such as uncashed checks, refunds, gift card balances, or stock dividends—receives no interest payment under New York’s program, even if the state holds it for 20 years. The interest rate is set quarterly by the New York State Department of Tax and Finance based on prevailing rates, so the exact amount varies. A property owner retrieving funds under this program might be pleasantly surprised to find interest included, but most people don’t even know this benefit exists because New York doesn’t widely publicize the program, and most unclaimed money claims don’t involve interest-bearing assets in the first place.

New York's Limited Interest Program: What Property Actually Qualifies?

New Jersey and Virginia’s Interest Policies: Different Approaches, Same Limitation

New Jersey takes a more straightforward approach: it calculates interest from the date property was escheated by the original holder until the date the claimant actually receives payment. The interest rate comes from the state’s Division of Investment’s Rate of Return schedule, which reflects what the state’s investment portfolio actually earns. In theory, this is more generous than New York’s approach because it doesn’t have a five-year cutoff—interest continues accruing for as long as the state holds the money. In practice, the actual rates tend to be modest, and most claimants never see the interest calculation because few understand how to request it or even know it exists.

Virginia’s law specifies that interest is paid “at the rate of five percent or such lesser rate as the property earned while in the possession of the holder.” This is the clearest statement of the principle that owners should receive the interest their property generates. However, Virginia’s language applies specifically to certain types of property and is not universally applied, and the five percent rate is now below inflation in most years. All three states’ interest policies share a critical flaw: they are obscure, not broadly advertised, and many claimants never discover them or know how to request interest payments when they file claims. The policies exist mostly on paper, benefiting only the small percentage of claimants who dig into state regulations.

The Real Financial Impact: How Much Interest Do Claimants Actually Miss Out On?

The cumulative impact is staggering. Nationwide, states hold an estimated $70 billion in unclaimed property. If that money earned an average of three to four percent annually—a conservative estimate—states would be retaining $2.1 to $2.8 billion in annual interest that belongs to property owners. A single unclaimed checking account balance of $10,000 sitting for 15 years without any interest-bearing features might legitimately earn $4,000 to $6,000 in interest if held in a standard savings vehicle, yet the claimant receives exactly $10,000 back—no more, no less. The state keeps the interest.

The timing challenge adds another layer of injustice. If you discover your unclaimed property years after it was escheated, you’ve already “lost” years of potential interest. Even in the three states that do pay interest, the windows are limited. New York’s five-year window means that property held for six years generates interest for only five of them. A claimant who waits 20 years to file a claim in Virginia might still recover their principal, but the interest aspect is forgotten entirely. The most devastating scenario is for heirs who discover unclaimed property belonging to a deceased relative: the interest may be even more substantial, but the deceased received no benefit whatsoever.

The Real Financial Impact: How Much Interest Do Claimants Actually Miss Out On?

The Scale of Unclaimed Funds and What Interest Should Be Returned

The state-by-state holdings reveal the magnitude of this situation. New York’s $18 billion, California’s $15 billion, Texas’s $10.5 billion, and Ohio’s $4.8 billion represent not just principal but years of lost interest. New York’s 2026 figure is actually larger than it was in 2020, illustrating that escheated property continues to accumulate faster than claims are resolved. For every billion dollars held, even at a modest two percent annual return, states collect $20 million annually in interest that should theoretically go back to claimants. Consider a real-world example: a utility customer who moved in 1995 left a $300 deposit on account.

The utility, unable to locate the customer, escheated that $300 to the state in 2000. For 26 years, that money has been in state custody. At three percent average annual interest, that $300 would have grown to approximately $725. The original customer, now retired, discovers the unclaimed money and files a claim in 2026—but they receive $300, not $725. The $425 in interest funded state operations, school budgets, or emergency accounts. The utility customer’s deposit earned more than double its face value, yet they received nothing beyond their principal.

The Ongoing Debate Over State Interest Policies and the Path Forward

Consumer advocates and some lawmakers have begun questioning why states don’t pay interest or, at minimum, why interest policies remain so hidden and limited. Federal lawmakers have also targeted states’ use of unclaimed property, recognizing that these funds represent real money that should be returned to rightful owners, not quietly absorbed into state budgets. Some have proposed that all states should adopt interest-paying policies similar to New Jersey’s continuous-accrual model, which rewards both the state for responsible investment and the owner by paying earned returns. The future of unclaimed property interest remains uncertain.

Some states have shown little motivation to change, given the substantial interest revenue they collect. Others might adopt more transparent interest policies if pressure mounts from federal legislation or public awareness campaigns. New York and New Jersey’s existing programs demonstrate that paying interest is logistically possible without breaking state budgets, suggesting that resistance to expanding these policies is largely political and financial rather than technical. As unclaimed property balances continue to grow and inflation continues to erode the value of principal-only returns, the fairness argument for state-paid interest will likely intensify.

Conclusion

The reality of unclaimed money and interest is clear: most states benefit financially from the interest earned on billions in unclaimed property, while the rightful owners receive no interest whatsoever. Only a handful of states—primarily New York, New Jersey, and Virginia—have formal policies paying any interest to claimants, and those policies are narrow, limited in duration, or poorly publicized. The claim that “only 2 states pay interest” undersells the larger point: most people have no idea that unclaimed property generates income at all, let alone that they might be entitled to a portion of it. If you’re pursuing an unclaimed money claim, file as soon as possible and specifically ask the state agency about interest owed.

In New York, inquire whether your property qualifies for the limited interest program. In New Jersey and Virginia, understand that interest may be calculated differently. In all other states, prepare for the reality that you will receive your principal only—and that any interest generated will remain with the state. This hidden interest subsidy to state treasuries represents one of the clearest examples of how unclaimed property laws favor government over individuals.