Nowadays many people have more than one bank account like a salary account from an old job, a zero balance account opened under some offer or an old joint account. Over time we stop using these accounts, but do not formally close them. This carelessness can become a problem in future.
Small account, big loss
Often people think that an empty account will not cause any harm, but it is not so. If the minimum balance is not maintained in the account then the bank starts deducting penalty every month. Gradually the amount in the account may be exhausted or the balance may even go negative. If there is no transaction for a long time, the account becomes inactive or dormant. To re-activate such an account, one has to go to the bank and complete the process, which can be time consuming and cumbersome.
Credit score may be affected
An ordinary savings account does not directly affect the credit score, but the facilities associated with it can definitely have an impact. For example, if an account has an overdraft (OD) facility and there is an outstanding balance on it, the bank may treat it as an unpaid loan. This may spoil your CIBIL score.
Apart from this, many old accounts are linked to insurance premium, EMI or demat account. If you neglect your account, important payments may bounce, increasing the risk of additional charges and a bad credit history.
Increasing threat of cyber fraud
Accounts which you do not check regularly can become easy targets for cyber fraudsters. If the mobile number or email in your old account is not updated, then you will not get information about any suspicious transaction. Therefore, keeping fewer and active bank accounts is a safer and wiser step.
Do these things before closing your account
If you are thinking of closing an old account, then keep some important things in mind. First of all, download the bank statement of last 2-3 years, so that it can be used in future for tax or other purposes. After this, definitely check whether there is any auto-debit, subsidy or EMI link to that account. In the end, just withdrawing the money is not enough. Go to the bank and fill the account closure form and get written confirmation. Also, destroy the debit card and deposit the check book in the bank. Closing old accounts at the right time is an easy and important step to safeguard your financial health.