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    Is there any benefit in having several bank accounts?

    Synopsis

    Ongoing SIPs, EMI payments and utility payments linked to different bank accounts prevents most people from closing them.

    Banks mark an account as inactive or dormant if there is no activity in it for a certain period of time.
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    Supriya has multiple bank accounts. Some were opened when she changed jobs or moved to a new city.

    She also has some zero-balance accounts. Ongoing SIPs, EMI payments and utility payments linked to different accounts have prevented her from closing them.

    Is there any benefit in having so many bank accounts? How can she bring some order to this chaos?


    Except for two or three accounts, Supriya should close the others. Banks mark an account as inactive or dormant if there is no activity in it for a certain period of time. If the only transaction in an account is the periodic credit of interest on the existing balance, it is treated as dormant.

    These accounts can receive money, but Supriya may have to reactivate them if she needs to access the money. Withdrawing all the balance except a small amount is also a poor idea as the bank may levy a charge for not maintaning minimum balance. Employers often do not notify a bank when an employee quits, lulling many to believe that their account still has zero-balance facility. This could lead to fines piling up.

    Supriya should earmark a single bank account as her main operating account, into which she can transfer the money from her salary account. She can move all her payments and investments into this account. All she will have to do is set up an electronic transfer to her main account, whenever she changes jobs. She can then easily close all older bank accounts.

    The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta

    (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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    1 Comment on this Story

    Atul Chandra768 days ago
    I advocate a 3 account strategy. First being the salary account , second a monthly expense account where monthly transfer should ba made and all monthly expenses being paid from therein, third would be investment account. Each month transfer of amount required to be invested should be transferred to this account and all returns, dividends etc should be received in this account. In this way a clear picture of the monthly plan is also available. The salary account would be used for leisure and outings related expenses, clothing, gifts and other pleasure related expense.
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