The average minimum monthly balance is the average amount you must maintain in your checking or savings account in a calendar month. Unlike the daily minimum balance amount, the monthly minimum balance is calculated based on the average of the daily ending balance amount over the entire month. At the end of each month, the bank calculates whether you have met the required average minimum monthly balance. If you don’t, you may have to pay fees or a fine to the bank. If you maintain an average minimum monthly balance, there are some benefits that we discuss here.
You will learn financial discipline.
Maintaining a minimum average balance each month in a bank account or savings account can discourage you from making non-essential withdrawals or purchases and help promote an attitude toward saving. By doing this, you will develop the habit of maintaining financial discipline, which can come in handy.
Indirect effect of credit health
Maintaining an average minimum monthly balance also has a positive impact on your credit health. Your credit score depends on your ability to repay the loan. When you have sufficient funds in your bank account, you will be better prepared to repay your loan on time.
Benefit from higher interest and special offers too.
The higher the savings account balance, the greater the chances of earning returns in the form of interest. In the bank’s savings account, you can take advantage of special offers on debit and credit cards, lifestyle benefits, rewards points, and preferential pricing on certain products like personal loans.
Depending on the category of banks and area.
The average monthly minimum balance requirement depends on the category of different banks and areas. The conditions of private banks are stricter than those of government banks. To maintain a minimum monthly account balance, you will need to maintain your budget in a disciplined manner.
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