What happens when you leave your savings account unused?

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 money and grow your wealth over time. Moreover, it is essential for accessing other financial services, such as loans, insurance plans, 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 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 FIRST Bank Savings Account interest rate of up to 7.00% 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! 

Why you should avoid keeping your savings account idle
 

Here are four 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 cannot 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, its balance and interest are routed to the RBI’s Depositors' Education and Awareness Fund. Again, you will need to complete extensive documentation to recover these funds.

2. It will incur penalties
 

Most savings accounts require a minimum balance. Service charges, such as maintenance or card fees, may reduce your balance over time. Penalties are triggered once below the required limit, further depleting your funds.

3. Wasted investment opportunity
 

While leaving a certain amount unattended in your savings account for a while to earn interest is a good idea, you miss out on investing the same money in more lucrative options such as fixed deposits or mutual funds. 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!

How to deactivate a bank account
 

If you have an unused savings account and wish to close it to avoid penalties or complications, follow these steps –

1. Step 1 – Visit the bank branch

Go to the bank where the account is held. Make sure you carry your original identification documents, such as your Aadhaar, PAN card, and bank passbook.

2. Step 2 – Submit a written request

Fill out the account closure form provided by the bank. Mention your account details and reason for closure.

3. Step 3 – Clear pending dues

Ensure the account has no negative balance, unpaid charges, or pending transactions. The bank may ask you to clear these dues before proceeding.

4. Step 4 – Withdraw the remaining balance

Transfer or withdraw the remaining funds in the account. Banks may issue the balance through cash, cheque, or direct transfer to your preferred account.

5. Step 5 – Surrender related items

Return items such as the debit card, unused cheques, and passbook to the bank for cancellation.

6. Step 6 – Confirmation of closure

Once the bank processes the request, you will receive an email or written acknowledgement confirming account closure.

By deactivating an account you no longer use, you can avoid unnecessary fees and manage your finances more efficiently.

How to close a savings account online
 

Many banks offer online account closure options if you prefer managing your bank account closure digitally. Follow these steps to close your savings account online –

1. Step 1 – Log in to internet or mobile banking
 

Access your account through the bank’s official website or mobile app. Use your registered username and password.

2. Step 2 – Locate the account closure option
 

Navigate to the ‘Account Services’ or ‘Help Desk’ section, where you will find an option for account closure.

3. Step 3 – Fill out the Closure Request Form
 

Complete the online form with your account details, reason for closure, and preferred mode for receiving the remaining balance (e.g., transfer to another account).

4. Step 4 – Verify KYC details
 

Some banks may ask for digital verification of your identity via Aadhaar-based eKYC or OTP authentication.

5. Step 5 – Settle pending dues
 

Before proceeding, ensure the account has no pending charges, EMIs, or negative balance.

6. Step 6 – Submit the request
 

Once you have completed all the steps, submit the closure request online. You will receive confirmation of the request via email or SMS.

7. Step 7 – Withdraw remaining funds
 

The bank will transfer the remaining balance to your linked account or as specified in your closure request.

By opting for online account closure, you save time and avoid the hassle of visiting a branch. However, ensure the bank offers this feature, as it may vary by institution.

How does opening a savings account online benefit the customer?
 

After understanding the steps to deactivate or close an unused savings account, it’s equally important to consider the benefits of maintaining an active one. Rather than letting your account sit idle or closing it entirely, exploring options like opening a new, rewarding savings account can prove more advantageous.

Opening a savings account online simplifies the process while offering significant benefits –

1. Convenience
 

Customers can open an account anytime, anywhere, through a paperless and digital process with video KYC.

2. High interest earnings
 

Options like the IDFC FIRST Bank Savings Account offer competitive interest rates of up to 7.00% p.a., with monthly interest credits to maximise your savings.

3. Cost-effective features
 

IDFC FIRST Bank offers free and unlimited ATM withdrawals, minimising transactional fees and providing easy access to funds.

4. Added perks
 

Online savings accounts often include benefits like free accident insurance coverage and exclusive rewards for account holders.

5. Low minimum balance
 

A manageable minimum monthly balance of either ₹10,000 or ₹25,000 ensures flexibility without compromising on account features.

Switching to an online savings account ensures you effortlessly earn, save, and enjoy banking benefits.

Conclusion
 

Leaving your savings account unused can lead to unnecessary penalties, missed opportunities, and a lot of hassle. By keeping your accounts active and managing them efficiently, you can enjoy the full range of benefits they offer. Whether it’s interest earnings, special rewards, or easy access to funds, a well-maintained savings account ensures your financial health stays on track.

Explore the rewarding features of IDFC FIRST Bank Savings Accounts today and take the first step toward smarter, hassle-free banking.