Moisture leads to mildew, the cause of most smelly towel issues. If the moisture is from something already malodorous, such as a sweaty gym towel, the towel may develop even worse odors. Avoid throwing wet or even slightly damp towels in a heap inside the laundry basket. Never leave wet, washed towels inside the washing machine, but instead dry the towels promptly. If you can't wash the towels immediately, hang them from a hook or rack. This allows the moisture to quickly dry so the towels don't develop mildew and foul odors.
Cold water doesn't kill germs and may not destroy bacteria that cause the odors in the towels. It's safe to wash bath towels in hot water. Hot water kills germs and bacteria, which helps ensure a fresher smell in the finished laundry. If you must wash the towels in cold water, use a laundry detergent formulated for cold water washes. Also add a colorfast bleach or oxygenated bleach product to the wash to ensure that germs are killed in the cold water wash.
Vinegar serves two purposes when washing towels. The vinegar helps neutralize odor, and it softens the towels. The odor of the vinegar is rinsed away with the rinse water in the final washing cycle. Add 1 cup of vinegar to the load of towels after the washing machine fills with water. Sun-drying the towels can also help eliminate odors. The ultraviolet rays bleach out minor stains and kill odor-causing bacteria trapped in the fibers. If you prefer tumble-dried towels, dry the towels in the dryer as usual, then hang them outdoors in the sun for 30 to 60 minutes to help neutralize any remaining odors.
Store towels in a dry linen closet to prevent them from absorbing moisture. Otherwise clean towels may develop a sour odor from moisture exposure during storage. Inspect towels after drying to ensure that they are completely dry before folding them, so moisture isn't trapped in the fibers during storage. Avoid drying overly large loads, as these take longer to dry, and all the towels may not dry completely. If you reuse a towel several times, such as hand towels, hang these up after each use so they dry and don't develop mildew before you launder them.