What Happens When You Leave Your Savings Account Unused?

Imagine waking up one day to find that your hard-earned money is locked away and inaccessible. Sounds stressful, right? This is precisely what happens when you leave your Savings Account inactive for too long. Many people open multiple bank accounts for convenience but fail to use them regularly. If you’re guilty of this, you might unknowingly be setting yourself up for unnecessary hassle.

Let’s explore what happens to an unused Savings Account, why it’s a bad idea, and what you can do to avoid the pitfalls of account dormancy.

What Is a Dormant or Inactive Savings Account?

A Savings Account is considered inactive if there have been no transactions for over a year. If it remains inactive for two consecutive years, it is classified as a dormant account. Once an account becomes dormant, the bank restricts various banking activities, making it difficult for you to access your money without additional formalities.

To keep your account active, ensure you conduct transactions like deposits, withdrawals, or online/UPI fund transfers periodically.

Why You Shouldn’t Leave a Savings Account Unused

Here are a few critical reasons why keeping an account inactive is a financial mistake:

1. Penalty for Non-Maintenance of Minimum Balance

Most banks require a minimum balance in Savings Accounts. If your inactive account doesn’t meet this requirement, you’ll be charged penalties. Over time, these deductions can reduce your account balance significantly. If you have a Savings Account with Ujjivan, kindly ensure to check the Monthly Average Balance maintenance requirement and the penalty charged due to non-maintenance of the same here.

2. Restricted Account Access

Once an account is marked dormant, you lose access to key banking services, including:

• Cheque issuance
• ATM/Debit card transactions
• Internet and mobile banking
• Fund transfers
• Address updates or other modifications

Reactivating a dormant account requires Video KYC verification or KYC via bank branch, causing unnecessary hassle.

3. Missed Investment Opportunities

Leaving money idle in an unused Savings Account means you are losing potential earnings. Instead, you could invest in Fixed Deposits or Recurring Deposits, which provide better returns.

What Should You Do Instead?

• Transact at least once a year to keep the account active.
• Close accounts you don’t need to avoid unnecessary penalties.
• Set reminders to perform small transactions periodically.