Has your savings account balance fallen below the required monthly average? Here’s what can happen
Most of us usually have several savings bank accounts. The reason can be anything from a new salary account opened every time one changes jobs to a high interest rate offered on fixed deposits by some banks. Although it is easier to open a bank account, it is important to know that you must maintain a monthly average balance (MAB) in each of these accounts so that you do not have to pay a penalty for a low balance.
The monthly average balance is the minimum amount you must maintain each month in your savings account. Banks calculate it by adding up each daily closing account balance and dividing it by the number of days in the period. If the figure falls below the average level, banks usually charge a penalty. Check with your bank for the balance you need to maintain to avoid any charges.
For example, HDFC Bank Ordinary Savings Account has a minimum average balance requirement of Rs 10,000, Rs 5,000 and Rs 2,500 for urban, semi-urban and rural branches. If the bank drops below the required level, the bank charges you a penalty ranging from Rs 600 to Rs 150 depending on the amount of the balance. For example, if the balance falls below Rs2500, a penalty of Rs 600 is charged and if it is between 7,500 and less than Rs10,000, it is Rs 150 (for metro and urban accounts).
Similarly, ICICI Regular Savings Bank account has MAB requirements of Rs 10,000, Rs 5,000, Rs 2,000 and Rs 1,000 for metropolitan and urban areas, semi-urban areas, rural areas and grassland areas. , respectively. In case the balance is less than the average monthly balance, a penalty is levied at 6% of the shortfall or Rs. 500 whichever is lower.
In the main account of Axis Bank, an average monthly balance of Rs 25,000 is required and if it falls below the level, 7.5% of the shortfall or a maximum of Rs 600 must be paid.
The SBI savings account has no monthly average balance requirement. Similarly, you do not need to maintain a minimum balance in the case of a salary account.
However, it is important to understand that many people do not know how the average balance is calculated. Indeed, it is obtained by adding the closing balance of your account each day divided by the number of days of this month. So if your balance was below the threshold for most of the month, even then you can avoid a penalty by maintaining a higher amount for the rest of the month.
These simple tips will help you avoid a penalty in case it drops below the required minimum level.
Also read: Savings account tip: Can’t maintain your bank’s minimum balance? Do this to avoid fines
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