Having more than one bank savings account may lead to monetary loss that people don’t notice. If the earning individual is a salaried person, then it’s better to have a single savings bank account than having multiple savings accounts. According to the tax and investment experts, it’s easy to maintain one bank account and when you are filing your Income Tax Return, your job becomes easier as majority of your banking details are available in single bank account.
However, apart from convenience, there are some monetary benefits if you have single savings bank account as you will be paying bank service charges being levied on the debit card AMC, SMS service charge, minimum balance, etc.
Speaking on how many savings account one should have, SEBI registered tax and investment expert Jitendra Solanki said, “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, etc. on multiple number of times.” 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.
Here are the top five losses that one may have to incur if he or she has more than one bank savings account:
1] Prone to forgery: Having more than one bank savings account means chances of dormant account, which is most prone to forgeries. This happens when a salaried person switches job from one organisation to other leaving salary account as it is where it is. In such case, the salary account becomes dormant and as said earlier, such accounts are most prone to forgeries.
2] Danger to CIBIL rating: 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.
3] Multiplication of service charges: 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, the service charge payment gets doubles.
4] Hit on your investment: Having a bank savings account requires maintaining minimum balance as well. If you have multiple number of banks then there are chance of a big amount getting choked in your savings bank account. These days, private banks are asking for Rs 20,000 minimum balance and if you have three such bank accounts in three different banks, your Rs 40,000 will get choked in maintaining minimum balance of the two additional bank savings account. This additional Rs 40,000 can be used for investment purpose and get return 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 4-05 per cent, which is almost half of what one can earn through investment in debt funds.
5] Income Tax Fraud: In bank savings 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.