Many individuals leave behind old salary accounts after switching jobs or forget about zero-balance accounts opened during promotional offers. While an unused account may appear harmless, keeping it active without monitoring can create financial and security risks. Financial experts advise formally closing such accounts to avoid unnecessary complications.

Minimum Balance Penalties Can Drain Funds

Most savings accounts require customers to maintain a minimum balance. If this requirement is not met, banks may levy monthly penalties. Over time, these charges can significantly reduce the remaining balance and may even result in a negative balance.

Even zero-balance accounts may attract annual maintenance charges, debit card fees or service costs that continue to accumulate without the account holder’s awareness.

Impact on Credit Score

Unused accounts can also affect your credit profile. If an overdraft facility or auto-debit for loan EMIs is linked to the account and payments fail due to insufficient funds, the bank may report it as a missed payment.

Such defaults can negatively impact your CIBIL score, making it more difficult to secure loans or credit cards in the future.

Increased Risk of Cyber Fraud

Dormant accounts are often more vulnerable to fraud. If your registered mobile number is outdated or you are not regularly monitoring transactions, suspicious activity may go unnoticed. Fraudulent withdrawals or unauthorised transactions can cause financial loss before corrective action is taken.

Regularly reviewing active accounts and closing those no longer in use reduces exposure to such risks.

Important Steps Before Closing an Account

Simply withdrawing the remaining balance is not sufficient. Proper closure requires a formal process. Before initiating closure:

• Download and retain bank statements from the past two to three years for income tax or legal purposes.

• Ensure all auto-debits such as insurance premiums, SIPs, utility bills or government subsidies are delinked.

• Clear any pending charges or overdrafts.

To close the account:

• Visit the bank branch and complete the official account closure form.

• Submit or destroy unused cheque books and debit cards.

• Request written confirmation from the bank stating that the account has been closed successfully.

The Bottom Line

An unused bank account may seem insignificant, but hidden fees, credit risks and security concerns can create long-term problems. Regular financial housekeeping — including closing inactive accounts — is essential for maintaining a healthy credit profile and protecting personal finances.