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What does having multiple bank accounts mean for you?

Author: Adhil Shetty/Wednesday, October 24, 2018/Categories: Banking & Financial Services, Expert View

What does having multiple bank accounts mean for you?

People end up holding multiple bank accounts, sometimes knowingly, sometimes as a result of ignorance of the implications it has. Banks often mark an account inactive if there have been no activities over a certain period of time except for the periodic credit of interest. This money is not accessible as well unless the account is reactivated. Neither can you withdraw all the money from the account due to the requirement of maintaining a minimum balance.

In this context, you might want to remember the primary purpose of having a savings account. The idea is to maintain a liquid fund for meeting urgent money requirements and to earn interest in the process. This need can be met with one or two savings accounts. In fact, holding multiple accounts could be more pain than gain. So, usually, it is advised to have fewer bank accounts to avoid unnecessary stress and to manage the account efficiently.

Let’s look at some reasons why you must consolidate your bank accounts or eliminate your old and surplus accounts.

Maintaining minimum balance

Most savings account requires you to maintain a minimum balance and it could go over Rs 25,000 for some banks in the urban regions. Non-maintenance could result in application of penalty charges. Thus, the more accounts you have, the more cash you need to maintain in each one of them. So you will be blocking valuable money in these accounts which otherwise could have been invested in lucrative instruments.

Charges associated

Holding multiple accounts implies paying charges on services such as debit cards, ATM use, SMS alerts etc, whether you use the accounts or not. Not maintaining the minimum balance can lead to paying of fine up to Rs 600. Irregularity in maintaining the accounts can affect your relationship with the respective bank, thus ruining your credit score.

Losing tab of the accounts

Many a times, people transact only through one or two accounts even if they have multiple accounts. This increases the chance of you forgetting about the other accounts, thus leaving them dormant. Dormant accounts are often exposed to the risk of getting misused, if they catch the attention of unscrupulous people. You cannot even access the interest accrued unless you reactivate the accounts.

Difficulty in tax filing

At the time of filing Income Tax Return, you need to submit details from all of your bank accounts. This could be a lot of work. So instead of dividing your fund into multiple bank accounts, keep it in one or two bank accounts to maintain a higher balance. This would help you to get the benefits of a high-end savings account. With a high-end savings account, services which are otherwise chargeable such as cheque book request, debit card, money transfer, and duplicate passbook and so on, can be accessed at a waivered cost or for free.

The author is CEO, BankBazaar

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Adhil Shetty
Adhil Shetty

Adhil Shetty

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2 comments on article "What does having multiple bank accounts mean for you?"


10/24/2018 11:40 PM

Please let me know whether I can keep two separate Current Accounts, in two different States of India, in the name of my Firm. Bank Manager of one of the State says to close any of the account as two accounts should not be operated though I operate both the accounts on day to basis.

What is your opinion?


11/30/2018 5:15 PM

I have multiple accounts in different cities in the bank and I want to consolidate in one branch but always the bank manager's discourage this.

I am NRI and all accounts are either NRE or NRO. In spite of having computerized system , bank discourage this. I s there a way to consolidate the accounts by sending emails or otherwise.

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