6 Reasons Why You Shouldn't Leave A Savings Account Unused

6 Reasons Why You Shouldn't Leave a Savings Account Unused

The Concept of a Savings Account

Opening a savings account is one of the first financial steps to start off with personal banking in India. And of course, you will want to find the best bank to open an account and deposit your hard-earned money to keep it safe and let it grow. A bank account also gives you access to a wide range of banking services like loans, fixed deposits, digital wallets, net banking, debit and credit cards, etc.

However, with availability and convenience, we tend to open multiple savings bank accounts in India but end up using only a couple of them, leaving others unused. Let’s find out why this may not be a good idea.

A savings account helps you save money and earn interest on it. You can also enjoy many financial services linked to your account. For instance, you need a savings account to create fixed deposits, open recurring deposits, or invest in mutual funds. Moreover, your savings account is linked with your Aadhaar and PAN, which makes things easier and faster when you apply for loans and other financial products.

The Importance of Not Leaving Your Savings Account Unused

Today, the likes of Kotak811 provide an online account opening zero balance without stress. However, if you do not use your account, it becomes dormant after some time, according to Reserve Bank of India (RBI) guidelines. That is why you must ensure you don’t leave your savings bank account unused for long. To keep it active, perform different transactions using each account, including cash deposits, withdrawals, outward bills, cheque transactions, etc.

Must Read: Types of Bank Accounts

Reasons Why You Shouldn’t Leave a Savings Bank Account Unused

An unused savings account may lead to some form of penalties, wasted investment opportunities, missed savings account benefits, to mention a few. Take a look at six solid reasons why you should not let a savings account stay unused.

Reason 1: Opportunity Cost

Opportunity cost refers to potential gains you miss out on when opting for an investment choice over another. While funds in an unused savings account still earns interest, you miss the opportunity cost you could have gained by investing that money in more lucrative options like fixed deposits. Hence, keeping a savings account active and investing that amount in other investment options like FDs, recurring deposits, mutual funds, etc., could be a wiser option.

With a Kotak811 ActivMoney Savings Account, the money in your account works when you let it rest. It works like this - your savings need to cross a certain limit (?25,000), after that, you can choose to earn interest on every ?5,000.

If you don’t want to lock away your money into an FD but still want it to earn FD-Wala interest (up to 7%*) with zero penalties: Kotak ActivMoney is for you.

Reason 2: Inflation

In economics, inflation is the rate at which the price of products in an economy increases. When this happens, it reduces your purchasing power: the amount of money you have will not be able to buy you the same amount of things as it would otherwise. Moreover, inflation can hurt even more if you weren’t earning any interest on an unused savings account. Therefore, keeping the account active gains interest over time, helping you combat inflation and maintain your purchasing power.

Reason 3: Emergency Fund

If you are wondering when to open a savings account, it's never too soon to start. You don’t need to be employed for opening an account, it's purely meant for savings. It acts as an emergency fund you can use whenever needed. A savings account has no lock-in period, and the minimum balance requirement is negligible, or zero. So, if there is an emergency, or whenever you need money, you can take it from your savings account.

However, if you keep the account inactive, it becomes dormant after two years, according to RBI guidelines for most savings banks in India. Your funds will get stuck in the account unless you complete the process to access them

Reason 4: Financial Goals

Determining your financial goals is an efficient way to create wealth, gain a sense of purpose and direction, and stay on the right track to achieve success. They also motivate you to take the right financial steps.

A savings account can help you achieve those goals and fulfil your desires to improve the quality of your life. Whether your goal is to buy a car, go on a vacation, or save money for a down payment, you can choose from the best banks to open an account and save funds. However, don’t leave your savings bank account unused. If it becomes dormant, you won’t be able to access your money instantly.

Reason 5: Achieving Short Term Goals

Short-term goals help create happy moments in life. Whether it is a family vacation to your dream destination or a small home improvement, save money in a savings account and keep achieving them to improve the quality of your life. However, you should keep your account active with small transactions to access the funds whenever it's time to achieve such a goal.

Reason 6: Peace of Mind

An active savings account is your backup in today's age. Having easily accessible cash, you get peace of mind knowing that you can fulfil your family's desires and achieve financial goals without hassle. You're also better placed to tackle any emergencies that may require money.

Must Read: Personal Financial Planning


It is necessary to choose the best bank to open an account. Remember, don’t leave your savings bank account unused to keep your money ready and by your side, always. An unused savings account will become dormant after two years, and you won't be able to use your funds to their full potential. So, keep it active for the above reasons and achieve your financial goals without any hassle.

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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.