Many people have multiple savings accounts. Some people do this thoughtfully because they believe that keeping money in different accounts is beneficial and convenient. But many people have different reasons for increasing the number of savings accounts, such as changing jobs frequently, moving from one city to another for employment, business needs etc.
If you have multiple savings accounts and you use only one, then it is a good decision to close the rest accounts. Today we will tell you about some disadvantages of having more savings accounts. But first let’s talk about the benefits.
Advantages of having more savings accounts
- If you have multiple savings accounts, you can do more transactions from ATMs. Can hold multiple checkbooks and credit cards.
- A major reason for having more savings accounts is that in case of bankruptcy of a bank, only deposits up to Rs 5 lakh are guaranteed to be returned. This is the reason why people keep more savings accounts and keep less amount in them.
Disadvantages of having more savings accounts
- Condition of maintaining minimum balance: This rule is applicable to the savings accounts of all banks that you have to maintain a minimum monthly average balance in every account. Even if you have multiple savings accounts and you are using only one or two, you still need to keep a certain amount in the rest of the accounts.
- penalty: If customers are not able to maintain even minimum balance in savings account, then they have to pay penalty as per rules.
- Dormant Account: Transactions should continue even if there is a minimum balance in the bank account. If there is no transaction from the account for a long time, then the account becomes dormant. If the doorment account is activated again, then a complete process has to be followed.
- Maintenance Fee and Service Charge: An annual maintenance fee and service charge is levied for bank accounts. This rule is applicable in all banks. Remember maintenance fees and service charges are applicable on all accounts whether they are in use or not. Along with this, if you have debit or ATM card for every account, then its fee will also have to be paid.
- While filing income tax return, you have to give details of all your accounts. Collecting information related to all accounts such as bank statements is also a big head-scratching task. If by mistake the details of any account are missed, then the problem can increase. If the Income Tax Department considers this to be tax evasion, then you may also have to face penalty or tax notice.
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