Multiple bank accounts cause big money loss plus stress; why single savings account is all you will ever need

Multiple bank accounts may lead to money loss that a bank savings account holder does not not ice. However, here we explain why multiple bank accounts will ensure you face big loss of money.

ZeeBiz WebTeam | Apr 21, 2020, 03:40 PM IST

You go to work every day to earn money and thereby feed, clothe and shelter your family. You also save money in a savings bank account. However, over the years you end up having more than 1 savings bank account without really noticing or paying attention. But beware, that negligence will lead to massive loss of money in the long-term. Money that could have ensured a very comfortable lifestyle for you in the future due to the magic of compounding. Photo: Reuters

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Why Multiple Bank Accounts Are Bad

Why Multiple Bank Accounts Are Bad

Well, multiple bank accounts leads to money loss that a bank savings account holder does not even notice. If the taxpayer is a salaried person, then it's better to have single savings bank account than having multiple savings bank accounts. Tax and investment experts are of the opinion that having single savings account help you file your income tax return (ITR) with ease as all your banking details are available in single bank statement. Experts are of the opinion that not just the convenience, there are some monetary benefits involved in keeping single savings account as this helps you avoid multiplication of the bank service charges being levied on the debit card AMC, SMS service charge, minimum balance, etc. Photo: PTI

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How many bank savings account one should have

How many bank savings account one should have

"It's better to have single savings bank account as it becomes easier to maintain the minimum balance and avoid paying bank service charges like debit card AMC, SMS service charge and more a number of times," said Jitendra Solanki, SEBI registered tax and investment expert. He said that if a person is salaried, having single savings account will make it convenient for the earning individual while filing its income tax return too. Photo: PTI

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High probability of forgery

High probability of forgery

Dormant account problem. Having more than one savings bank account means chances of having a dormant accounts increases. This can also make it prone to forgeries. This happens when a salaried person switched job from one organisation to other leaving one's salary account as it is where it is. In such cases, the salary account becomes dormant and as said earlier, such accounts are most prone to forgeries. Photo: Reuters

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CIBIL rating in peril

CIBIL rating in peril

Your money quotient dips. Having more than one savings account may lead to problem in managing your bank account with proper minimum balance, etc. In such a case, a single miss may lead to penalty that is directly related to your CIBIL rating. Photo: PTI

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Multiplication of service charges

Multiplication of service charges

Have more, pay more. Having a bank account attracts various service charges like SMS alert service charge, debit card AMC, etc. If you have single bank savings account, you will have to pay once while in the case of more than one bank savings account, service charge payments get doubled or tripled. Photo: Reuters

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Hit on investment

Hit on investment

Maintaining minimum balance is a problem. Having a savings bank account requires maintaining minimum balance in all of them as well. If you have multiple number of bank account then there are chance of a big amount getting choked in your savings bank account. These days, private banks are asking for Rs 10,000  and more as minimum balance and if you have three such bank accounts in three different banks, your Rs 30,000 will get choked in maintaining minimum balance. This additional Rs 30,000 can be used for investment purpose and you can get good returns on it to the tune of 8 per cent as debt funds attract at least 8 per cent in the short-term investment. But, in bank savings deposit, one will get around 4 per cent or less, which is half of what one can earn through investment in debt funds. Photo: PTI

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Income Tax Fraud

Income Tax Fraud

Tax travails increase by leaps and bounds. In savings bank account, interest up to Rs 10,000 is tax exempted and hence the TDS deduction. So, till you are getting Rs 10,000 interest in your bank savings account, your bank will not deduct TDS, but due to the multiple number of bank savings account, it may happen that your bank didn't deduct TDS as your single bank account didn't garner Rs 10,000 interest in a financial year but after adding the entire interest in all your an savings account, it may cross Rs 10,000 making you liable for TDS deduction! In that case, you will have to inform the Income Tax Department about the same during ITR filing. Failing to that will lead to income tax fraud, which committed unknowingly. Photo: PTI