As we move from one job to another we have a tendency to accumulate bank accounts as different organizations have salary accounts with different banks. This results in multiple problems:
a. Penalties on not maintaining the minimum balance.
b. Loss of interest income as bank accounts provide minimal interest.
c. Security concerns – the hassle of remembering credentials of multiple accounts.
The benefits of having at most one or two accounts, on the other hand, are:
a. Your surplus money is more visible and thus you can invest that money for better returns
b. All your payments can be linked to one account so you don’t have to remember which account to use for SIPs or bill payments
So here’s how you can consolidate your accounts.
Step 1. Identify your primary account or the one which you generally use.
Step 2. Move all your auto debit instructions for SIPs or bill payments to that account.
Step 3. Close the non-essential accounts, which will generally require a visit to the bank. You can choose to retain one backup account in case of any unforeseen circumstances.
But what if your employer does not support your primary account?
In this case simply schedule transfers from the salary account to your primary account and periodically manually move any remaining balances. The salary account can act as your backup account.
This 15 part series helps you identify and complete a single task every day for 15 days to take charge of your financial life. Over these 15 tasks, you will know more about your money and how to make it work harder while having to do less work and also worry less.