What is the Minimum Balance in Savings Account & How Much to Maintain
If you are a savings account holder you must maintain a minimum balance on your account. If you fail to maintain the required minimum balance in savings account as per your bank's criteria, you need to pay a penalty. All banks levy a certain fine if the minimum savings account balance is not maintained by the account holder.
However, the bank does not charge this penalty on the minimum balance but on the Minimum Average Balance (MAB). The following sections will help you learn about MAB and how to maintain it efficiently.
What is the Minimum Balance You Need to Maintain in Your Savings Account?
The minimum balance in a savings account may vary from one bank to the other as they differ in rules and regulations. However, you can maintain the Minimum Average Balance (MAB) if you cannot keep the minimum monthly balance.
To calculate the MAB, first, you need to add all end-of-the-day closing balances available in your savings account. Then divide it by the total number of days in that month including holidays. Let's take an example for better illustration:
Suppose you need to maintain a MAB of ₹2,000 in your savings bank account. So, for September, your closing balance at the end of the day will be as follows:
₹2,000 x 30 days = ₹60,000
So, if you can maintain this amount at the end of September, you need not pay any penalty charge for not maintaining the minimum balance.
How Can You Maintain the MAB (Minimum Average Balance) in Your Savings Account?
Here are some of the tips you can follow to maintain the Minimum Average Balance of your savings account:
Keep Away from Opening Multiple Accounts
Opening multiple accounts will increase your burden of maintaining the MAB in all of them. Thus, you can maintain the minimum balance in savings account by operating a single account. Moreover, it will help you track the account and access the funds feasibly without worrying about maintaining a huge balance in different accounts.
Withdraw Money Wisely
While making payment use your debit card or pay online on the required date. This way you can earn the interest on your savings account deposits for a longer time. However, if you withdraw the money in advance to make the payment, you will end up receiving less interest and failing to maintain the minimum balance.
Deposit Substantial Amount
Depositing a lump sum to your savings account is the smartest and easiest way to maintain the MAB. For instance, if your MAB is ₹2000 and you deposit an amount t of ₹50,000 to your savings account, you can easily maintain the closing day balance. As MAB is calculated on monthly basis, you get enough time to back up the balance between the month.
Top 5 Banks with their Minimum Balance Requirements and Non-Maintenance Charges
Here are the top 5 banks with their minimum balance in a savings account and non-maintenance charges:
|Savings Account||Minimum Balance Requirement||Non-maintenance Charges|
|SBI Savings Plus Account||₹1,000 for rural areas, ₹2,000 for semi-urban areas and ₹3,000 for urban areas||Up to ₹10 for rural areas, ₹12 for semi-urban areas and ₹15 for urban areas|
|ICICI Bank Regular Savings Account||₹1,000 for Gramin area, ₹2,000 for rural areas, ₹5,000 for semi-urban areas and ₹10,000 for urban areas||For Gramin locations 5% of the shortfall in the required Minimum Average Balance, and for any other location, ₹100+ 5% of the shortfall in the required MAB|
|Kotak Mahindra Bank Edge Savings Account||₹10,000||Up to ₹500|
|Yes Bank Savings Advantage Account||₹10,000||Up to ₹500 monthly|
|HDFC Bank Regular Savings Account||₹2,500 for rural branches, ₹5,000 for semi-urban areas and ₹10,000 for urban branches||Up to ₹450 for rural areas, ₹300 for semi-urban areas and ₹600 for urban areas|
Which Bank Accounts are Free from Minimum Balance Maintenance?
You can also open certain savings accounts which do not have any minimum balance requirements. Take a look at the list below to know such savings accounts where you don't need to maintain any minimum balance:
- Pradhan Mantri Jan Dhan Yojana Accounts (PMJDY)
- Zero Balance Savings Account
- Kids/Minor Savings Account
- Basic Savings Bank Deposit Accounts (BSBDA)
- Pensioners Savings Bank Accounts
- Salary Package Accounts
- Basic Savings Bank Deposit Accounts
- Small Accounts
- No Frills Accounts
Which Banks are Free from Minimum Balance Maintenance?
Take a look at the following bank’s savings account which does not require any minimum account balance:
- ICICI Bank Edge Savings Account
- Kotak 811 by Kotak Mahindra Bank
- digiSavings Account by DBS
- Aasaan Account offered by Standard Chartered Bank
- IDFC Bank Zero Balance Account
- FedBook Selfie Account offered by Federal Bank
What are the Features and Benefits of a Savings Account?
A savings bank account can be beneficial to you in many ways. Here are some of the notable features and benefits of a savings account:
- A savings bank account is the safest way to keep your surplus funds protected.
- The interest rate on savings accounts ranges between 3.5% and 7% per annum
- Savings accounts are easily accessible through mobile banking or internet banking.
- If you maintain a minimum quarterly balance, banks will offer you a discount on locker rental facilities.
- Savings account holders can receive debit cards against their account which can be used in ATMs across the country.
- Banks often offer insurance policies to savings account holders that cover accidents and death as well.
Thus, maintaining the minimum balance in a savings account is a bit tricky. You need to understand the MAB requirement and research thoroughly before opening a savings account. Moreover, you can keep away from the hassles of maintaining a minimum savings account balance by choosing zero minimum balance savings accounts.