Changing jobs is common these days, but when it comes to salary accounts, many people are confused: “Should I close my old bank account, or is it better to keep it?” This question becomes extremely important because it’s not just a matter of your financial security, but also of future income tax, PF, and other benefits. So, let’s learn, with the advice of financial experts, what to do with your old salary account when changing jobs.
Benefits of Closing Your Old Salary Account
1. Account Management Becomes Easier
If you have two or more bank accounts, managing transactions and bill payments can be a bit cumbersome. Closing your old account reduces this burden and makes account management much easier. This helps maintain financial control.
2. Freedom from Bank Fees and Penalties
Many salary accounts are converted to Regular Savings Accounts after job loss. Maintaining a minimum balance in these accounts is mandatory, and failure to maintain it results in a penalty. Closing your old account saves you from unnecessary charges that can be costly.
3. Strengthening Security
An account that has been inactive for a long time can become vulnerable to fraud. Closing it is an important financial security measure. Therefore, closing your old salary account upon changing jobs is recommended to maintain financial security.
Benefits of Maintaining Your Old Salary Account
1. Tracking Pension, PF, and Tax Records
If your old account was linked to PF or tax deductions, closing it may make it difficult to track those records. Keeping the old account intact makes it easier to keep track of your retirement and tax records and helps with any disputes or clarifications in the future.
2. The Benefit of a Better Credit History
Sometimes, the credit history of an old account can be very useful when applying for a new loan or credit card. It shows the bank that your financial behavior has been stable and reliable, increasing the chances of approval.
3. Use as an Emergency Fund
If you maintain a small amount in the old account, it can be used as a savings and emergency fund. This backup fund can come in handy in case of an unexpected expense or medical emergency.
Close or Deactivate
According to financial experts, if the account is inactive and doesn’t have any significant funds or PF linked to it, it’s best to close it. However, if the account has PF, tax records, or old loans and investments linked to it, deactivating it instead of closing it is the best option. Experts say, “Transfer the balance from the old account to the new one and deactivate the account online. This maintains security, and it can be reactivated if needed in the future.”
Things to Keep in Mind When Closing a Bank Account
Be sure to keep a few important things in mind when closing a bank account. First, stop online transactions and shift all debits, credits, and autopayments to the new account. Don’t forget to update your PF and salary accounts for the new job. To close the account, visit the bank and fill out a form or complete the online process. Keep the account closure receipt safe, as it may be required for future deposits or tax claims.