4 reasons why you shouldn't leave your Savings Account unused

At a time when most people have multiple savings accounts, leaving one or more unused for long can render them “inoperative” as per RBI. This blog dives into 4 reasons why leaving your savings account inactive for long is a bad idea

One of our first forays into the world of personal banking is setting up a shiny new savings account. A good savings account lets you deposit your money and grow your wealth over the years. Moreover, it is essential to access other financial services like loans, insurances, EMIs, bill payments, digital wallets, and more.

But that depends on how active your savings account is.

So, what happens when you have a long-forgotten savings account somewhere that you have not used in years? Whether you have had multiple salary accounts every time you switched a job, or set up a new account with a lender that offered you better terms – such as a lucrative IDFC saving account interest rate of 7% p.a. – the likelihood of forgetting one such account is very high.

And while it’s a case of out of sight, out of mind, and you might be under the impression that an unused savings account would not impact you at all, think again! Here are 4 solid reasons why it is not a wise notion to keep your savings account idle:

1. It becomes inoperative after 24 months of inactivity

As per RBI guidelines, any savings account without any transactional activity in 24 months becomes inoperative. That means you will not be able to access your money, especially in times of need, without filing an application and submitting KYC documents for reactivation – something that is quite a hassle. Furthermore, if the account remains dormant for 10 years, then its balance and interest are routed to RBI’s Depositors' Education and Awareness Fund. Again, you will have to go through a lot of documentation to recover these funds.

2. It’ll incur penalties

We all know that most savings accounts require a minimum balance, else a penalty is levied on them. By leaving your savings account inactive, there’s a possibility that you will not be able to maintain its minimum balance requirement or do not have the sufficient funds, thus leading to depletion of your balance over time.  

3. Wasted investment opportunity

While leaving a certain amount unattended in your savings account for a while to earn the interest is a good idea, you miss out on investing the same money into more lucrative options such as a fixed deposit. Hence, keeping an inactive savings account with a lot of money is not the wisest investment choice.

4. You miss out on your savings account benefits

Your savings account is not merely a locker for depositing money. In many cases, it also offers special programs, reward points and features like sweep-in fixed deposits that allow you to earn more income through transactional activity in your account. Surely, you don’t want to miss out on that!

Final Words

As we have read above, it makes a lot of sense to minimize the number of idle savings accounts and use them to their full potential. A good way to start would be to switch to a more rewarding savings account such as the one we offer at IDFC FIRST Bank:

• IDFC FIRST Bank savings account interest rate of 7% p.a. with monthly interest credits
• Paperless and digital account opening with online KYC
• Free and unlimited ATM withdrawals
• Just INR 25,000 minimum monthly balance requirement
• Free accident insurance coverage
• Multiple rewards and benefits

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.