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Reasons You Should Close Your Idle Bank Accounts 
Reasons You Should Close Your Idle Bank Accounts 
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Money Management

Reasons You Should Close Your Idle Bank Accounts 

Doreen Gathoni
May 13, 2022

It's common practice to have more than one bank account. However, rarely does one actively use each bank account.

So, while reasons vary from person to person - in time, some reasons for holding onto an account become impractical.

Consequently, before selecting which accounts to close, start by understanding the different account status terms. 

1. Open Account

An open account is an account actively used for transactions on any banking platform.  

2. Inactive Account 

An account becomes inactive if no transaction or any other activity occurs within six months or twelve months’ (it varies with each bank) period. Interest or dividends automatically deposited into the account do not count as activity.

3. Dormant Account

This term refers to accounts that don't record transactions and interactions for more than 24 months. 

4. Closed Account

This term describes accounts where an individual or a business is no longer a bank customer. Since it's a terminated account, you will not transact through the account.

Contact your bank for clarification and assistance, especially if you have debts to clear or share an account.

If you catch yourself favouring the option of holding onto all your accounts - bear in mind that a bank account is a financial tool designed to work for you. So, these are some of the risks of having an idle account, of which you should be aware.  

Risk 1: Fraud Attack

The most obvious risk is that idle bank accounts are a prime "hunting ground" for fraudsters. 

The main goal of fraudsters is to defraud others by illegally accessing and using your personal details. 

If a fraudster is able to gain access to your account, they could use it to swindle other people without you even ever realising it. 

And they can successfully hide their identities from their victims and your bank, such that if an investigation were to be conducted, you could be at risk of being liable for the crime committed. 

Risk 2: Account Fees May Pile Up

Most bank accounts issue a debit card which is charged annually (chargeable whether you use the card or not). Also, depending on the account type, you may incur ledger fees if you fail to close the account. 

Word Of Advice: Charges ultimately dig into your funds, so your goal should be to avoid paying any charges for an account you no longer use.

It is possible that you may be charged monthly fees to the extent that your account goes into arrears if you do not take the time to close it.  

Risk 3: Idle Accounts Can Be a Tax Burden

Could you imagine the length of time and legal fees required to investigate and plead your case with local tax authorities to prove your innocence?

It's a waking nightmare in a couple of ways, so the more idle bank accounts you have, the worse it will be.

Imagine if your inactive or dormant account is hacked and used to conduct transactions.

As the account holder, you bear the tax burden of the costs and outcomes of each unauthorised transaction, which will have devastating consequences for your financial portfolio and future.  

Be prompt about reporting suspicious and ongoing activity on your bank account(s), and avoid possible tax fallout cases.

Risk 4: Loss or Monetary Value, Poor Returns

Even if you think the possibility of fraud is low or the idle account you have doesn't charge monthly maintenance or ledger fees, you still have to consider another real risk. 

If the account that you are no longer transacting on is a current account and it has money in it - that amount is losing its value each month as inflation rises.

As a rule of thumb, you want to keep the money that you do not want to spend soon in a place where it can get the highest interest possible. 

Current accounts in Kenya do not offer any significant interest rate on deposits. Regular savings accounts offer interest rates just about the rate of inflation or a little bit higher.

You want to be thinking about fixed deposit accounts, a type of unit trust as well as treasury bills and bonds. 


Keep in mind the financial sector has its vulnerabilities, so by being diligent and vigilant, you can stay ahead of the possible problems. 

In sum, close idle accounts that no longer serve you. As for those that you want to maintain, do keep track of each bank account.

Prevention Is Always Better In Any Life Scenario, Even In Finance 

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Gathoni is a skilled content developer with over 5 years of experience in content development as a graphic design and copywriter, in different industry sectors. Her passion to nurture positive, stronger, communication impact continues. You can find her on LinkedIn here.

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