Inactive bank accounts may attract penalties, increasing the risk of cyber fraud
Old and unused bank accounts can be a drain on your wallet. They increase the risk of penalties, auto-debit failures, and cyber fraud. It's crucial to close them promptly and check the necessary links.
Nowadays, many people have multiple bank accounts, such as a salary account from a previous job, a zero-balance account opened under an offer, or an old joint account. Over time, we stop using these accounts but don't formally close them. This negligence can lead to problems later on.
Small account, big loss
People often assume that a depleted account won't cause any harm, but that's not true. If the minimum balance isn't maintained, the bank begins deducting a monthly penalty.
Gradually, the account's balance may deplete or even go negative. If there are no transactions for a long period, the account becomes inactive or dormant. Reactivating such an account requires a bank visit, which can be time-consuming and cumbersome.
It can affect your credit score
A simple savings account doesn't directly impact your credit score, but the features associated with it can.
For example, if the account has an overdraft (OD) facility and any outstanding balance remains, the bank may consider it an unpaid loan. This could impact your CIBIL score.
Additionally, many old accounts are linked to insurance premiums, EMIs, or demat accounts. If you neglect the account, important payments may bounce, leading to additional charges and a risk of a damaged credit history.
The growing threat of cyber fraud
Accounts that you don't check regularly can become easy targets for cyber criminals. If your mobile number or email address isn't updated on your old account, you won't be alerted to any suspicious transactions. Therefore, it's safer and wiser to have fewer active bank accounts.
Do these things before closing your account
If you're considering closing an old account, keep a few important things in mind. First, download bank statements from the last 2-3 years for future tax purposes or other purposes.
Next, make sure to check if there are any auto-debits, subsidies, or EMIs linked to the account. Finally, simply withdrawing money isn't enough. Visit the bank, fill out the account closure form, and obtain written confirmation.
Also, destroy the debit card and deposit the checkbook. Closing old accounts at the right time is an easy and essential step to safeguard your financial health.