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What’s A Minimum Balance in Bank Accounts?

By AJ Silber Published June 7, 2019 Updated October 2, 2022

If you are looking to open a new account, the vast majority of modern banks will require a minimum balance. This is not only to stop people deciding to open pointless bank accounts with literal pennies, but because a bank is, at the end of the day, a business, so if it costs them more to maintain the account than in in the account itself, it’s no wonder they would prefer to close or refuse to open  that account.

A bank might rely on customers for its overall financial wellbeing, but customer accounts cost money to keep open thanks to branch maintenance costs, customer service costs and more.

What is it?

The minimum balance is set as the smallest amount you’ve held in your account during a given month and depending on the bank, there will be a number of different specific requirements. For some banks, if you have dropped below the balance during a statement cycle then you might be charged a few, for others, it’s ok to drop below the minimum for a period as long as it’s back above the line by the end of the day.

Some other banks, meanwhile function on an average monthly balance basis, which means they will add up the daily minimum balances over the month and divide them by the number of days in that month.

No minimum balance banks

Whilst many banks require a minimum balance to open an account, checking accounts might not. A lot of online banks offer fee-free no minimum balance accounts and they can afford to do that because their overheads are substantially lower than their brick and mortar counterparts. Credit unions also generally offer no minimum deposits.

Top tips for avoiding the minimum balance

  • Use online banking. Whilst we might have balked at the idea of shunning the traditional big banks until recently, modern online financial services are far more efficient, convenient and reliable than they were in the past.
  • Set up regular direct despots into your account to prevent yourself from falling within the realms of the minimum balance.
  • If you qualify, open a student bank account, as they seldom have minimum balance requirements and will often also require no monthly fees. If you shop around, you might even be able to find an account with an interest-free overdraft!
  • Ask yourself if you will have enough money in the account to avoid the fee. If you don’t think you’ll be able to stick to that, don’t open the account in the first place!

Because the banks with minimum balance requirements are generally the banks that are able to offer more exhaustive features, you might want to go with them even if you can find a no minimum option. However, if you don’t think you will actually use those features, the no minimum balance option should always be the way to go!

Posted in Finance

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AJ Silber

I don't always talk about myself in the third person, but it sounds something like this when I do.

AJ Silber is an SEO specialist, web designer, hosting expert, and social media marketing guru with an eye for the future.

In 2017, AJ founded The Guerrilla Agency – a digital marketing agency that quickly achieved success, eventually leading to a multi-million dollar exit.

Along this journey, AJ gained valuable experience in leadership, finance, and other critical areas of business.

Currently, AJ is dedicated to helping entrepreneurs grow their businesses through his expert knowledge and guidance.

Visit author facebook pageVisit author linkedin pageContact author via email

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