Reasons Not to Leave Your Savings Account Dormant
Many of us have multiple savings accounts that we set up for various reasons, but more often than not, at least one or two remain unused or inactive. While we do not usually bother about these aspects, it is important that you refrain from keeping these accounts dormant. Wondering why? Let’s find out more below.
Dormant Savings Account Meaning
Your savings account become inactive in case you have not used it for any transaction for more than a year. At the same time, if it stays inactive for two years, the bank may classify it as a dormant account. You can always avoid this scenario by periodically using the account to deposit or withdraw money, make payments, etc. Here are some reasons why you should not keep these accounts inactive.
Inactive/Dormant Savings Accounts- Main Reasons to Avoid These Scenarios
Here’s why you should not leave your savings accounts in an inactive or dormant state.
The account will become inoperative after 24 months
Did you know that the RBI guidelines state how any savings account without transactions/ activity over a period of 24 months will be inoperative? Probably not! What this means is that you will be unable to access the funds you have in this account, particularly during financial emergencies.
You will have to fill up an application and submit your KYC documents again to reactivate your account, leading to major time and energy expenditure. If an account also stays dormant for 10 years, then the interest and balance will go to the RBI Depositors’ Education and Awareness Fund. You will have to go through tedious paperwork and processes for recovering your funds in such extreme scenarios.
You’ll have to pay fines/penalties
Most savings accounts mandate a minimum balance amount, failing which a penalty is imposed on the same. By keeping your savings account dormant or inactive, you may not be able to maintain this minimum balance or it may have insufficient funds to meet this requirement, thereby leading to major balance depletion or penalties over time.
Wasting investment scope
Keeping funds parked in your savings account does earn you interest, but an inactive account means that you’re losing out on an opportunity to invest in other options like a fixed deposits and so on. Keeping an inactive savings account with a higher amount of money is never a wise decision.
Missing benefits offered with savings accounts
Savings bank accounts also come with several associated benefits, including special reward points, sweep-in fixed deposits, and other programs. You may miss out on the same due to the lack of any transactional activity in the account.
What You Should Do
You should close savings bank accounts which you have kept inactive/dormant for quite some time. If you don’t intend to use them, it is better to close these accounts to avoid the above-mentioned scenarios and penalties. Reach out to your bank’s customer support team or visit the branch for more guidance in this scenario.
Alternatively, you can always revive your inactive accounts by regularly transacting money, keeping some funds in these accounts, deploying investments, making payments, and so on. After all, an account represents an existing banking relationship, one that may be useful in the future for loans and other purposes. Hence, if feasible, you can make the account active once again, taking advantage of all its customer benefits once more and re-establishing your relationship with the bank.
Conclusion
As you can see, keeping your savings account dormant or inactive is not a wise move at all. It may lead to penalties and the account being classified as inoperative. So, either close the account or revive it promptly to avoid the hassles listed above. If you wish to open a savings account with competitive interest rates, multi-channel banking, and access to strategic investment options, Unity Small Finance Bank can be a good option.
