5 Factors About Dormant Savings Account You Need To Know Today!
It is common to hold multiple savings account in your name. But not keeping them active is not. It is challenging to maintain multiple accounts active. Not only does it lead to mismanagement but also confusion. If you do not attend to your inactive saving account, it can cost you a hefty amount.
What are dormant or inactive savings account?
It is always easy to open a savings account nowadays. You could either go the offline mode, or online saving account opening is the new trend. With mobile banking apps, applying for a savings account is just a click away. However, if you do not attend to your accounts for any transactions for over a year, the account becomes inactive. If you do not use it for another year, they become dormant or inoperative.
To avoid such circumstances, you can use the account for the purposes like outward bill, cheque transactions, cash deposits, cash withdrawals, etc.
Factors to remember regarding the dormant account:
- Fraudulent activities: The bank turns the account into an inactive one for security and protection of funds purposes. This way, you are away from the risk of fraudulent activities. If you do not use your account for a long time, bank employees can easily catch hold of your past signatures and access your deposited money using the recent withdrawal slips. Hence, to save your account and hard-earned money from such activities, banks group them into a single account and maintain records of the inactive account in a separate ledger.
- Restrictions: The limitations of an inactive saving account vary from bank to bank. While some have restrictions on mobile banking apps and internet banking, others impose limits on cheque transactions. There may be limitations on ATM transactions as well. Other banks do not allow chequebook requests, debit card transactions, renewal of debit card, information update, and phone banking.
- Transactions: As mentioned earlier, if you do not operate any transaction for 12 to 24 months, the account becomes inactive. Remember, these transactions include only yours and third-party operations. The bank-initiated transactions such as interest on savings account or penalties and service charges debited by the bank are not considered when the account becomes deactivated. Credit on interest, earned through fixed deposits, are considered as customer transactions and assists in keeping the account active.
- Bank communication: Banks generally intimate you at least three months before the account gets reclassified. They should also explain you the procedure of reactivation of the account. If you respond to the bank immediately and provide a valid reason for non-operation of the account, the account remains active for at least another year. If you continue to keep the account inactive during the extended period, your account becomes dormant at the end of the extended duration. However, you will receive an interest in the saving account despite being an inactive one. ‘
- Reactivation of account: Reactivating accounts is simple. You could make a withdrawal or deposit to reactivate the account. You need to submit a reactivation request at your home branch. Note that the bank does not charge you for reactivation of the account.
Considering dormant accounts happen due to no usage of the account, make sure to close the saving account that you do not need. In case you wish to keep the account in use, then try to make at least one withdrawal or deposit each year.