4 Reasons Why You Should Not Leave Savings Account Unused

A savings account is a type of bank account where you earn a moderate interest in maintaining a minimum balance. It is a magic box where you store your hard-earned money that comes useful at the time of emergency. The interest rates depend on the minimum balance you maintain in the account. This rate can vary from bank to bank. However, there are limitations on the number of withdrawals you make every month.

So, why do we opt for saving account?

• The interest rates are higher than the inflation rate
  
  
• With the help of a digital savings account, you can pay bills quickly, make instant transactions, track account and much more by logging to your account on the internet or mobile
  
  
• Savings account inculcates the habit of saving. It also brings about financial stability since there are limitations on the number of withdrawals
  
  
• You even get access to customised savings account based on your requirement

However, an unused savings account has its consequences. The moment you do not transact from your savings account for more than 12 months, it becomes inactive and turns into a dormant account.

What are dormant accounts?

It is an account that has had no activity for a long time, apart from posting interest. There are no limitations on the withdrawal. So, the owner or the beneficiary can claim the funds anytime.

You can avoid turning your saving account into a dormant account by following the below rules:

• Savings account are known as a mode to accumulate wealth. In fact, it is the first step towards investment for millennial. However, when you change jobs, you tend to change locations as well. That leads to multiple account ownership. The onus will be on you to maintain not only a minimum balance but to ensure the account does not turn into a dormant account. Remember, keep one savings and investment account which is accessible.
  
  
• If you allow your savings account to dry up, there are chances that the bank might levy penalty charges. That will, in turn, burn a hole in your pocket. Note down the additional costs for facilities such as free fund transfer, demand draft, paying bills and others.
  
  
• We make use of the account to pay our loan equated monthly installments (EMIs) but never use it for paying bills. Considering India have taken the ‘Digital India’ campaign seriously, certain banks offer the bill paying service on your bank account through the banking apps. Through the digital savings account, you can pay the bills to your service providers immediately without worrying about the backlog.
  
  
• With the help of the savings account, you get access to other financial products such as recurring and fixed deposits. Some accounts also provide the auto-sweep facility that invests your idle sum in the savings account into fixed deposits. The sum in your savings account should exceed INR 25,000.