Why You Shouldn’t Leave Your Savings Account Unused

When it comes to your finances, having a savings account should be top of mind. With a high interest savings account, you can save money quickly and easily while earning a return on your invested money. But leaving your high interest savings account unused may cost you more than just an opportunity for growth – it could also lead to unexpected fees that can reduce or even eliminate any return on investment. This article will explain why you shouldn’t leave your savings account unused to maximize the potential benefits of having one.

What is an Unused Savings Account?

An unused high interest savings account has not been used in a while or has never received any deposits. This account typically earns no interest and can incur maintenance fees and other charges over time. Additionally, leaving your savings account untouched for too long may cause it to become dormant, meaning the bank can claim ownership over any funds left in the account after a certain period (usually around five years).

Why You Shouldn’t Leave Your Savings Account Unused

You miss valuable opportunities to grow your money by leaving your savings in the account unused. High interest savings accounts are designed to help you earn more through higher returns on investment.

Reasons to Avoid Unused Savings Accounts

• Fees

If your savings account remains inactive for some time, you may be charged maintenance or administrative charges that can significantly reduce the return on investment. Additionally, your account may be subject to additional fees or deactivated if you do not meet minimum balance requirements.

• Loss of Interest

Keeping your savings in an unused account will prevent you from taking advantage of other accounts’ higher interest rates. Even small increases in interest can add up over time and result in a significant increase in your return on investment.

• Diminishing Value

Inflation is a factor that must be considered when deciding whether to leave your savings account unused. Over time, inflation will reduce the purchasing power of your money and could even result in a net loss if kept in an unused savings account for too long.

• Reduced Liquidity

If you keep your money in an unused savings account, it could be difficult to access the funds quickly if an emergency arises. Depending on the bank and account, transferring or withdrawing money may take several days or weeks, hindering your ability to respond quickly to financial needs.

• Opportunity Cost

An unused savings account means not taking advantage of other investment options such as stocks, bonds, mutual funds, or certificates of deposit (CDs). Such investments can provide a higher return on your money over the long run and should be considered when determining where to put your savings.

• Dormancy

If your savings account remains inactive, the bank may declare it dormant and attempt to take ownership of any remaining funds. To prevent this from happening, make sure you review your account regularly or set up automatic transfers that will keep it active.

• Peace of Mind

Finally, having an unused savings account can be a source of stress and worry. Without regular deposits or withdrawals, it isn’t easy to know whether the money is safe. By actively managing your account, you can ensure your funds are secure and protected from potential risks.

• Tax Savings

When you leave your money in an unused high interest savings account, you are forgoing tax-free returns available through other investments such as stocks and bonds. Additionally, you may be able to take advantage of other tax benefits, such as deductions or credits, when investing in certain types of accounts.

• Missing out on other investments

Last but not least, leaving your money in an unused savings account means you are missing out on other investment opportunities. Investing in stocks, bonds, and other assets can provide a higher return on your money over the long term.

Keeping your savings account active and taking advantage of alternative investment strategies ensures that your funds grow and provide maximum returns. Consider talking to a financial professional to determine which option is best for you. With the right strategy, you can ensure that your high interest savings account which is unused/ dormant is no longer hindering your ability to grow wealth. Also, remember to review your account regularly and make sure to take advantage of any new opportunities or products that may arise.

Conclusion

Leaving your savings account unused can considerably negatively impact the return you receive from it. From maintenance fees and reduced interest rates to diminishing purchasing power and missed investment opportunities, there are many potential drawbacks to leaving your money in an unused savings account. 

To maximize the returns of your investments, explore other options such as stocks, bonds, mutual funds, or CDs that may better suit your needs. By actively managing your savings account and taking advantage of alternative investing strategies, you can ensure that your money grows and provides maximum returns.