Many banks have an obligation for customers to keep a minimum balance in their saving account. The bank can penalize you for not maintaining adequate compensation. There is no limit to the penalties banks will impose for non-maintenance of an account with a minimum balance. The charges must be approved by the board of directors at the bank. The fees will differ from one bank to bank and branch from to branch and vice versa. Penalty fees for units located in rural and semi-urban areas will be less.
Additionally, the prices can be more expensive for individuals with a high net worth and those whose percentage of shortage in maintaining their balance is more. For instance, one who’s 80 percent behind in keeping their minimum amount will have to pay more than someone who is 20 percent less than an adequate balance. The main thing to remember is that banks don’t punish customers for not keeping the minimum balance daily. In contrast, it’s an amount that is monthly and is known as the average balance for the month.
How is the Monthly Average Balance Calculated?
The average monthly balance can be calculated simply by adding the closing credits of all days at the end and dividing by the entire number of working days during the month. This total amount of days includes days that are not working.
Let’s consider an illustration. Let’s assume that the average monthly balance that the account holder must maintain is 2000. In April, the total of the credits that were closed at the end of the month was 2000 x 30 = 60,000.
If he keeps this amount in his bank account, he won’t be penalized, but he will be punished if it isn’t done. It is not a problem that he does not reach 2000 on certain days. You can put 60000 into your account by the month’s final day and not be penalized.
Guidelines to Maintain Minimum Average Balance
Open a Zero Balance Account
Setting up a zero-balance bank account is easy. It is easy to do online and needs virtually nothing. It takes only a few minutes to complete it. However, you may need to visit your banks or financial institutions to have your KYC verification completed.
Avoid Opening Multiple Accounts
It is more convenient to manage a single savings account instead accounts. It will be simpler to manage the account in one place and simplify the task of maintaining a minimum average balance for each performance. You can access cash easily without stressing about the minimum amount of compensation.
Set Auto-Sweep Options
The setting of Auto-Sweep Options is the most efficient and most efficient way to keep the minimum balance of your account for savings. You can connect your fixed deposit account with your savings account to allow transfers of funds between the two. This way, you will avoid the minimum average balance below the threshold.
Deposit as a Lump Sum
The reality that the monthly average balance is calculated over the entire month offers adjusting flexibility. For instance, your average monthly balance is 90,000. However, until the two days before the month’s closing, you’re at 80,000. You could always make a lump sum payment of 10,000 to bring your closing balance at the end of the month to 90000. So, by depositing lump sums at any point within your account for savings, you will be able to achieve the minimum average balance requirements.
Use Online/Debit Card/POS to Make Payments
If you plan to pay, use a credit card, or pay online before the due date. Since if you take out funds before when you need them, you cannot earn interest from your savings accounts.
Top Zero Balance Savings Accounts
The table below provides a list of the top savings accounts with zero balances in 2022 that are available to Indian Citizens, along with the interest rates:
The maintenance of the minimum balance of your savings account and ensuring that you don’t face penalties when you fall lower than this minimum balance is an issue. Therefore, ensure that you open accounts with zero balance. This way, you’ll be able to use the money in your savings account easily and with flexibility. Also, close your inoperative accounts. Banks are not allowed to charge accounts that are not operational. But, it’s best to approach them since claiming back the money is a hassle. Before shutting the account, you must remove all your EMIs; investments charge card payments and other transactions automatically to the report.