Reg. DD states that institutions must pay interest on funds in dormant accounts. We are doing this. Currently, we pay interest on dormant accounts annually; however, we are soon to begin charging an "inactive" or "dormant" fee quarterly. Are there any guidelines on whether we must now begin paying interest quarterly on these accounts?

Prior instituting any charge on dormant accounts you need to check your State laws. You would be prohibited from taking such an action in Texas

Okay, but I just checked with our State Banking Department (Oklahoma) and we can charge a dormant fee. So, can anyone answer my original question?

I guess I see the charging a dormant fee (even though it is quarterly) a separate issue from the frequency of paying interest (currently annual). They do not have to be in absolute sync.
Was the account originally paying interest on a frequency greater than 1 year? If so, did you notify the customer of the negative change when you went to annual? OR Was the account not just dormant, but abandoned (no current address) and you could not locate them and therefore not notify them?

You may want to check out Title 735:80-5-1 concerning charges and deductions that may be withheld on unclaimed property rather than relying on someone in the Banking Department to make sure your comfortable.

Thanks for the responses. We have been paying interest annually on the accounts. Many of the accounts are abandoned (returned with no current address). We didn't know whether we needed to begin paying the interest quarterly to coincide with the dormant fee that was going to be charged quarterly.