How to Avoid Minimum Balance Fees in Your Bank Account

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Understanding Minimum Balance Requirements

Many banks and credit unions require you to maintain a certain amount of cash in your bank account, whether it’s a savings, checking, or money market account. The minimum balance requirement is the specific amount of money you’ll need to keep in the account at all times to enjoy certain benefits or avoid fees.

Here’s what you need to know about minimum balance requirements and how to find bank accounts that don’t come with them.

What Is a Minimum Balance?

A minimum balance is an amount your bank or credit union may require you to keep in your account at all times. Depending on the financial institution’s rules, following the balance requirement can help you avoid fees and potentially earn a higher annual percentage yield (APY). You could lose some of your earning potential or pay a fee any month your balance dips below the threshold.

Types of Minimum Balance Requirements

Minimum balance requirements vary with each financial institution and account. Here are a few different types of minimum balance requirements:

• Minimum opening deposit: The amount of money you’ll need to put into a bank account to activate it.
• Minimum daily balance: The amount of money you must keep in your account each day to avoid fees or earn interest.
• Average minimum balance: Your bank calculates the amount of money in your account at the end of each day and divides it by the number of days during the statement period. If your average balance exceeds the balance requirement, then you typically avoid fees.
• Minimum combined balance: Your bank will average the amount of money you keep across several accounts with that institution.

Do All Accounts Have Minimum Balance Requirements?

The short answer is no: Some financial institutions won’t set minimum balance requirements on any of their accounts. Others may charge a monthly maintenance fee on some or all accounts, but they’ll offer several ways to get the fee waived. Maintaining a daily or monthly account balance is often one way to do so.

Generally, certificates of deposit (CDs) set a minimum deposit, but you’ll find many savings and checking accounts that don’t ask for one at all. National banks with a branch presence often charge monthly maintenance fees and allow you to skip the fee when you keep a minimum daily balance in your checking or savings accounts. Credit unions and online institutions often won’t charge fees or set balance requirements.

What Happens if You Go Below the Minimum Balance?

You may face consequences for failing to maintain the required minimum balance in your bank account. For instance, you may be on the hook for a monthly maintenance fee if your balance falls below the minimum threshold. Or, you may lose the APY you were earning on your balance. The bank or credit union usually imposes these consequences only for the months your balance dips below the stated threshold.

How to Avoid Minimum Balance Requirements

Banks and credit unions that set balance requirements will usually offer ways around them. Here are some options to explore:

• Learn your bank’s or credit union’s minimum balance requirements: You can usually find these on your financial institution’s website or the agreement you signed when you opened the account.
• Research accounts that don’t have minimum balance requirements: Some institutions don’t have balance requirements at all, while others may apply them only to certain types of accounts. Check requirements with multiple institutions and research several accounts to find out your options.
• Set up direct deposit: Financial institutions will often waive the minimum balance requirement and monthly fee when you ask your employer to automatically deposit your paychecks into your account.
• Establish recurring transfers: You may also be able to skip the monthly maintenance fee after setting up regular automatic transfers from your personal checking account to your savings account (or vice versa) at the same financial institution.
• Take advantage of relationship discounts: Some banks eliminate account fees if you have more than one account—such as a checking and savings account—with them.
• Monitor your balance: If you frequently use your debit card, withdraw cash, or set up automatic payments through your account, your balance may dip below the minimum balance required before you know it. Ask your bank or credit union if you can set up low-balance account alerts.

The Bottom Line

Tracking your balance and staying above the minimum balance threshold can be time-consuming. And falling below the limit can get expensive if you’re routinely paying monthly maintenance fees. If you’re researching new bank accounts and you’re not sure whether you can follow minimum balance requirements, consider opening an account that doesn’t come with them.

For example, consider the Experian Smart Money™ Digital Checking Account & Debit Card, issued by Community Federal Savings Bank (CFSB), member FDIC. The Federal Deposit Insurance Corp. (FDIC) insures deposits up to $250,000 per depositor, per ownership category§.

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