Jiri is 38. Ten years of jobs and offers have left him with 13 accounts at 7 institutions. Among them: a €30,000 pension from a job he left, in funds with an expense ratio of 0.75% a year where his current plan charges 0.05%; €6,000 in two old savings accounts paying almost nothing; and three dormant accounts charging €5 a month each. None of it was a mistake when he opened it. Together it is a leak, and a picture of his money he cannot see in one place.
Forgotten accounts can cost money every year
For Jiri the leak is about €570 a year, illustratively:
| Leak | How it adds up | A year |
|---|---|---|
| Dormant-account fees | 3 accounts × €5 a month | €180 |
| Higher pension fund fees | 0.70 points more on €30,000 | €210 |
| Idle cash | €6,000 earning nothing instead of about 3% | €180 |
The cash management post covered where cash fits; account sprawl is what keeps it from sitting there. The other costs do not show up as a number. Every open card is one more place for fraud to go unnoticed until a statement arrives. Every forgotten account makes the picture wrong: if an old pension is missing from the list, the allocation, the rebalancing targets and the projections built on them are wrong too.
Why accounts pile up
Each life event opens accounts and rarely closes them. A first job brings a payroll account, a pension and often a first card. A new job brings another payroll account and another pension, and the old ones stay behind because moving them feels like effort. Marriage, a mortgage and a child each tend to add an account, sometimes at a new institution.
Rate-chasing leaves small balances behind. A savings account opened for a promotional rate keeps a small balance after the rate ends and the next offer appears elsewhere. After a few cycles, a household can hold several savings accounts, most paying close to the lowest rate on offer.
Sign-up bonuses add cards. Taking a bonus is rational; closing the card afterwards is also rational but rarely done, so unused cards pile up.
Old employer plans stay by default. Moving one takes a few small steps; leaving it takes none.
Fear of the credit-score hit keeps cards open. The loud version of the message, “closing a card hurts your score”, wins over the accurate one, covered below.
The clean-up: inventory, sort, move, settle
A first pass is about a weekend of work, then a few short follow-ups over a month or two while transfers settle.
Step 1: Inventory. List every account at every institution in one place: current and savings accounts, cards (open or dormant), brokerages, current and old pensions, education or health savings, loans. Note the balance, the rate or fund fee, any monthly cost and when you last logged in. The free multi-currency net worth calculator adds them up if they are in more than one currency. Most households find one to three accounts they had forgotten.
Step 2: Sort. Each account is essential (a job nothing else does: the payroll account, the main brokerage, the current pension), optimising (does something better: the buffer’s savings account, a card used for its rewards) or dormant (no job left). An account you have to argue with yourself about is usually dormant.
Step 3: Move. Each dormant account either joins one you keep or closes. For an old pension, the comparison is fees, fund choice and protections on each side, and the route matters more than the destination (next section).
Step 4: Settle. Once transfers clear, a common target is two or three institutions for most activity: one bank, one brokerage, and perhaps one specialty provider. An account beyond that has a specific job. Many people then put one review a year in the calendar: yields, dormant fees, beneficiaries and two-factor settings.
How investments move without selling
An in-kind transfer moves the holdings themselves from one broker to another, instead of selling them and moving cash. In many countries that avoids a sale that would trigger tax, and the money is never out of the market. Many brokers support it, under names such as ACATS in the US. Where a fund cannot be held at the new broker, it may have to be sold, so it is worth asking before starting.
The clean up for every other account
Unused cards. People who close cards often do it one at a time, newest first, keep the oldest open with a small recurring charge so it stays active, and hold off in the year before a mortgage or other big loan application.
Old savings accounts. These usually fold into the main savings account and close once empty, after checking any minimum-balance rule for closing.
Accounts with something in flight. A deposit still clearing, a settlement in progress or a scheduled investment that has not run yet is usually left to finish before the account moves.
Going forward. An app for account aggregation, or a monthly look at one list, keeps everything in view.
An old pension usually moves provider to provider, not through your account
One of the most expensive mistakes in consolidation is moving an old pension the wrong way.
How it happens. You ask the old provider to move the balance to your new pension. Instead, it pays the balance to you, or offers to, and it sounds like the same thing. The money lands in your bank account, and you plan to pay it into the new pension soon.
Where it breaks. In many systems, a payment made to you is treated as a withdrawal unless a local rollover or redeposit rule applies: it can be taxed as income that year, penalised below pension age, and lose its tax-advantaged status for good. Some systems allow a short window to put it back; many allow none. Paid out to Jiri, his €30,000 could count as income: at an illustrative 30%, €9,000 in tax, with a penalty on top in some countries.
The usual safer route is a direct transfer. The old provider sends the money straight to the new one, and it never stops being pension money. In most countries the new provider can start the request once it has the old plan’s details. When a form offers to pay the balance to you, a common response is to stop and ask for a direct transfer instead.
Unsolicited offers to “unlock” or move an old pension are a common scam in several countries. A transfer people start themselves, with a provider they chose, is the safer pattern.
The US 60-day rule, and what to do if a payout already happened
In the US, an eligible distribution paid to you from an old employer plan generally has to go into an eligible retirement account within 60 days to avoid tax, and the plan generally withholds 20% of the taxable amount. So a $50,000 distribution may arrive as $40,000, and rolling over the full $50,000 means replacing the withheld $10,000 from other money. Roll over only $40,000 and the other $10,000 is generally taxable; miss the 60 days and all of it generally is. The amount withheld counts as tax paid and is settled on the tax return; whether it comes back as a refund depends on the person’s total tax.
If a payout has already happened anywhere, the urgent questions are whether the money can still go back, by when, and how much: usually the full original balance, not just what arrived. The paperwork matters for the tax return.
Quick check: the old provider's form says "pay the balance to me, then I will deposit it with my new pension". Is that the same as a transfer?
No. In many systems the money stops being pension money the moment it is paid to you, and tax, penalties or a short deadline can follow. A direct transfer, provider to provider, avoids that.
How closing a credit card really affects a credit score
In countries with scores that weigh how much of your credit you use (the US, UK, Canada, India and others; many European systems work differently), closing a card can lower a score in two ways, and the effect is usually smaller than the warnings suggest.
Credit utilisation is the card balances reported to the credit bureau divided by the reported limits. Closing a card lowers the limits, so if balances are reported, utilisation rises: €10,000 against €50,000 of limits is 20%; close a card with a €10,000 limit and it becomes 25%. A rise of a few points usually moves a score by a few points, not tens. Paying in full avoids interest but does not always make reported utilisation zero, because issuers often report the statement balance.
History length is handled differently by each scoring model. In common US models, a closed account in good standing can stay on the report and keep counting towards account age for up to ten years. UK lenders use their own models, and closed accounts usually stay on credit files for about six years, so an immediate effect should not be assumed.
So for someone with no balance and plenty of other history, closing an old card has little effect; for someone with high balances and few accounts, it can matter. People planning a mortgage or other big loan within a year often wait until after it.
Quick check: every card reports a zero balance. Does closing an unused card raise your utilisation?
No. If every reported balance is zero, utilisation stays 0% before and after. Paying every bill in full does not by itself guarantee that zero is what gets reported. Other effects depend on the scoring model and the rest of the credit file.
Which old accounts to keep, and why
Not every old account should go. Common reasons to keep one:
- Cheaper funds than you can buy elsewhere. Some large employer and government plans hold institutional funds with fees well below retail ones. A rough test: the yearly fee difference times the years left, against the bother of one more account.
- A fund you cannot get elsewhere, such as the stable-value funds found mainly in US workplace plans.
- Stronger protection from creditors in some countries for employer plans, which can matter in professions with high liability.
- Rules that block a move for now: employer share plans with vesting or holding periods, or taxable holdings you plan to donate, gift or sell for a tax loss.
Many people note the exception in the inventory and look at it again each year.
What the transfer routes are called where you live
The steps are the same everywhere; the names and paperwork are local.
Transfer routes in the US, UK, eurozone, India, Australia and Canada
- US. Old 401(k) employer plans roll into a new employer plan or an IRA (individual retirement account); brokerage holdings move in kind through ACATS; health savings accounts can move between administrators. Scores mainly through FICO and VantageScore.
- UK. Old workplace pension pots often consolidate into a SIPP (self-invested personal pension); Cash and Stocks & Shares ISAs transfer between providers keeping their tax status. Scores through Experian, Equifax and TransUnion.
- Eurozone. How portable pensions are varies by country; platforms usually support in-kind transfers; accounts in different countries add complexity and local rules come first.
- India. EPF balances move between employers through the UAN; NPS is one account across employers by design; demat holdings consolidate through CDSL and NSDL. Scores through CIBIL, Experian, Equifax and CRIF High Mark.
- Australia. Super funds consolidate through the ATO or SuperStream, often a real saving because each fund can charge its own fees and insurance premiums; the insurance you would lose is worth checking first.
- Canada. RRSPs and TFSAs transfer between institutions. Scores through Equifax and TransUnion Canada.
A weekend of work, then a yearly look
For most households the first pass is two to four hours of inventory, an hour or two of sorting, a few hours over a week starting transfers and closures, then four to eight weeks of waiting while they settle. The result is a picture that fits in one view, upkeep measured in minutes a month, and cleaner inputs for every decision later in this series. The next post covers growing your income, one of the largest levers while you are building wealth.
Which of your accounts would you struggle to remember if you had to list them from memory today?