Why Banks Require a Minimum Balance

Financial institutions, especially banks, fix minimum balances in their accounts because, in simple words, we can say that customers cost them money. Your bank or other financial institutions which need a minimum balance have to pay above to run their branches smoothly, keep up accounts, provide customer service and many more things. Eventually, a bank is a business and businesses require it to generate money.

What Is a Minimum Balance?

We can define, minimum balance as the smallest amount of money that you have to keep in your bank account during all days of a particular month. Some types of minimum balance requirements exist, like:

• Minimum balance: When you have to keep a least specific balance in your bank  account, that means your account balance cannot go down that particular amount at any time during your statement cycle, if that happens you will be charged a fee by the bank.

• Minimum daily balance: This is related to checking accounts. In this, the required minimum daily balance means that your account balance can go below the fixed amount at any time during the day but you have to fulfill the least amount in the bank account, ultimately at the end of business day.

• Average monthly balance: Don’t confuse this term with average daily balance. To appear at an average monthly balance, the bank records of your account balance at the end of a business day. At the end of the period of statement cycle, the bank do averages of those balances — by summing them up and dividing that figure by the number of days in your statement cycle and that’s how they find the average monthly balance.

Banks With No Minimum Balance Required

In the USA, all financial institutions do not need minimum balances; some of the financial institutions provide a free, no-minimum-balance checking account — that means, a free savings account and there is no need of maintaining minimum balance in your account. But, an account which doesn’t need a minimum amount is hard to find. There are several other options where you can bank without having to worry about keeping a required balance.

An online bank, for example, often falls into the category of banks with no minimum balance required. Online banks have almost no overhead because they don’t operate brick-and-mortar branches and can reduce or eliminate checking account minimum balance requirements.

Because credit unions are nonprofits, the owners of these unions are their own members and they handle it too. They use their money generated to recompense their members with better rates, remove maintenance fees and provide no minimum balance requirements in the accounts. Don’t miss out! Check our previously published article on How To Open a U.S. Bank Account?

What Is a Minimum Balance Requirement?

Institution	Checking Account	Minimum Deposit
Axos Bank	Axos Bank Rewards Checking	$50
Bank of America	Bank of America Advantage Plus Banking	$100
Capital One	Capital One 360 Checking	$0
Varo Bank	Varo Bank Account	$0
Wells Fargo	Wells Fargo Everyday Checking	$25

Savings Accounts

Institution	Savings Account	Minimum Deposit
U.S. Bank	U.S. Bank Standard Savings Account	$25
Ally Bank	Ally Bank Savings Account	$0
American Express National Bank	American Express High-Yield Savings Account	$0
Marcus by Goldman Sachs	Marcus by Goldman Sachs High-Yield Online Savings Account	$0
Quontic Bank	Quontic Bank High Yield Savings	$100

CDs

Institution	Certificate Account	Minimum Deposit
Ally Bank	Ally Bank Certificates of Deposit	$0
Bank of America	Bank of America Fixed Term Certificates of Deposit	$1,000
Bread Savings	Bread Savings Certificate of Deposit	$1,500
Connexus Credit Union	Connexus Credit Union Share Certificate	$5,000
First National Bank of America	First National Bank of America Certificates of Deposit	$1,000

Money Market Accounts

Institution	Money Market Account	Minimum Deposit
Axos Bank	Axos Bank High Yield Money Market	$0
CIT Bank	CIT Bank Money Market Account	$100
First Internet Bank	First Internet Bank Money Market Savings	$100
Sallie Mae Bank	Sallie Mae Bank Money Market Account	$0
Synchrony Bank	Synchrony Bank Money Market Account	$0

Online savings accounts: typical minimum balances

Account	Minimum to open	Monthly fee	Minimum balance to avoid fee	APY	Minimum to earn stated APY
BMO Alto Online Savings Account	$0.	None.	N/A.	5.10%.	None.
Capital One 360 Performance Savings	$0.	None.	N/A.	4.25%.	None.
CIT Bank Platinum Savings	$100.	None.	N/A.	5.00%.	$5,000. (0.25% APY on balances less than $5,000.)

Traditional savings accounts: typical minimum balances

Account	Minimum to open	Monthly fee	Minimum balance to avoid fee	APY	Minimum to earn stated APY
Chase Savings℠	$0.	$5.	$300 daily balance.	0.01% effective as of 02/10/2023. Interest rates are variable and subject to change. (Learn more about Chase’s savings APY and other ways to waive fees.)	None.
First Tech Federal Credit Union Membership Savings	$5.	None.	N/A.	0.05%.	None.
Wells Fargo Way2Save Savings	$25.	$5.	$300 daily balance.	0.01%. (Learn more about Wells Fargo’s savings APY and other ways to waive fees.)	None.

How to Avoid Minimum Balance Requirements

In Some banks, it is compulsory to maintain a certain minimum balance, but you might be able to avoid that condition. Below, some ways are mentioned to avoid a minimum balance requirement:

Bank online: One way to avoid a minimum balance requirement is to bank online; this might be a good option for you if you’re comfortable with technology and don’t mind banking on the internet. Another fruitful method to ignore minimum balance requirements is to sign up for direct deposit with your bank.

Set up direct deposit: If you have your salary deposited directly into your account every month then your bank will not make it compulsory for you to maintain a minimum balance.

• Use a credit union: Explore your local credit union options to see if you can open an account with no minimum balance.

• Opt for a student account: If you qualify for a student checking account, get one — these accounts typically do not have minimum balance requirements. Student accounts usually provide other services too, like no monthly maintenance fee, free online and mobile banking and many more.

• Find a bank with no minimum deposit requirement: There are some banks who don’t need minimum balance requirements. Find that type of bank and open your account in it to enjoy no minimum deposit requirement.

How Is the Minimum Balance Calculated on Bank Statements?

The minimum balance on a bank statement can be calculated in various ways. Some banks use a simple and convenient minimum balance calculation process, where anytime your balance goes below that fixed amount, you’re automatically charged a fee for the month.

Some of the other institutions use a “daily minimum balance” calculation that keeps records of your balance at the end or starting of each business day and uses that amount to check whether you’ve gone below the fixed limit.

What if You Don’t Maintain the Minimum Balance?

Banks will charge a fee if you don’t maintain the minimum balance in your bank account. Also, you have to maintain a minimum balance in your account to get a certain amount of interest.

Frequently Asked Questions 

Conclusion 

In conclusion, we can say that banks require some really different types of minimum balance requirements. If you don’t fulfill the requirements, the bank will impose a charge on you or you can lose any interest or forgo other perks. The best way to avoid minimum balance requirements is by opening one of the best fee-free bank accounts.