August 23, 2017

Think Twice Before Opening Multiple Bank Accounts

Are you a person with multiple saving bank accounts. Are you planning to take multiple bank accounts. Have you notice how your money is slowly disappearing from bank accounts? You must read these 7 reasons on why you should think twice before opening bank [SB or Current] accounts in multiple banks.

1. Minimum Balance Requirement of Banks

As per Bank policy, an account should keep a certain amount of balance in the account. If a minimum balance is not kept in the account, banks will charge fine for it.

ICICI bank charges SMAB [Non maintenance of minimum monthly average balance (NMMAB) which is Rs.5,000 to Rs.10,000 for Metro / Urban locations, then MAB is Rs.350 per month. For rural locations, minium balance must be equal or mor than Rs.5,000, if not fine is Rs.450 per month.]

HDFC Bank deducts fine for non maintenance of Average Monthly Balance (AMB) from savings account. As per bank policya minimum AMB of Rs. 10,000 (metro/urban branches), Rs. 5000 (semi-urban), Rs. 2500 AQB (rural branches) should be kept in the account.If not charges will be levied from INR 150 to 600 depending upon location.

SBI charges non maintenance of both MAB charges and QAB [Quarterly average Balance] charges.For accounts in metro cities, a penalty of 100 Rs will be charged as MAB charges.For current accounts, QAB should be 10,000 Rs and fine is 544 Rs for non maintaining it. There is no QAB charge for Savings Accounts.

2. Victim of Online Frauds

When you have multiple accounts, you may not be able to keep track all bank details such as username and password. When you do online Domestic or International transactions, you may be doing it from different bank accounts and may forget to log out from accounts, thereby exposing chances for online phishing or fraud.

3. Issues in Managing Statements, Deposits and Balance

It will be hard to keep checks and balances of each financial transaction from multiple bank accounts. You many need to track statements from each account to track expenditure, deposits, interest rate, deductions for income tax invoice submission.

4. Getting Less Interest Rate For Money

Bank pay interest for keeping your money in accounts. However different bank pays different amount of interest. You must check with each bank to find out the maximum interest rate. By having multiple accounts in different bank, you may be losing the interest rate.

5. Keeping Passbook, Cheque, ATM Card, Credit Card Safe

You need to keep passbook, cheque, ATM card and credit card safe while travelling. There is high chance to lose them when you have numerous documents.

6. ATM / Credit Card Transaction Charges

Different banks charge transaction fee for withdrawal of money with ATM Card and fee for using credit card. By having multiple bank accounts, you many not be able to find out how your money is disappearing.

Multiple ATM cards in a blue color pocket
Keeping Safe

7. Increases Chances of High Spending

Having multiple accounts may increase the chance of high spending as you will be unable to track current balance. Also at times think that since the other bank accounts have money, I will spend all from this account, thereby spending more than you imagined.

Best Advises ForOpening Multiple Bank Accounts

1. Do Research on low minimal balance charges of different banks.
2. Check maximum interest rate of savings banks accounts.
3. Check low charges for ATM, credit card transactions.
4. Compartmentalize bank account: Keep an account for emergency account, one for all other transactions such as paying bills, family expenses, insurance, paying mortgage. etc.

Update: You can have a SB account for savings and a checking account [current account]. Current account allows you to deposit money and withdraw whenever needed. You can also have multiple checking accounts also in the same bank.

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