People usually tend to have multiple bank accounts, though reasons might vary person to person. Some might be doing it to control their spending, while some continue to hold on to older accounts when they switch jobs, which fairly remains inactive, and some might just have unused bank accounts that they opened from college or the ones that their parents opened for them after turning 18. But it is best to close these accounts if you are not using them.
Here are top five reasons why you should consider closing your old bank accounts:
1. Salary account turns into regular savings account and attracts charges: You have switched your job and the new organisation has opened a new salary account for you. Your old zero-balance salary account will automatically convert into a regular savings account in 3-6 months and will need the minimum average balance maintenance. If you don’t bother to maintain the same, the bank will start deducting charges for non maintenance of minimum balance. This will eventually eat up your money or might take your balance into negative and spoil your relations with the bank.
2. Maintaining minimum balance in 3-4 accounts will make you lose interest: Most of the banks require the account holders to maintain a minimum average balance of Rs 10,000. If you have 2-3 extra unused old salary accounts, where you have kept Rs 20,000-30,000 for maintaining the balance, you are losing on interest. It will be a wise decision to close these accounts and park the funds in FD or mutual funds, as per your risk taking capability. Deposits in savings accounts only earn 4% ROI, which is way too less.
3. Excessive Fee: You must be carrying a debit card for all bank accounts. These cards are not free and the bank charges an annual fee which usually varies from Rs 200-500 plus taxes. The point is, why pay some charges for a service which you no longer use. Similarly, the bank deducts charges for SMS alert services, too. All these charges eventually eat up your money for no reason.
4. Too many accounts create confusion at the time of filing ITR: There is no benefit in making your tax returns complicated and overburdening yourself in gathering information and statements from too many banks at the time of filing income tax returns.
5. Your account might be misused: Keeping inactive dormant accounts might gain attention of fraudsters and may be misused.