Most of us generally have multiple savings bank accounts. The reason could be anything from a new salary account being opened every time one changes a job to a high-interest rate offered on fixed deposits by certain banks. While it is easier to open a bank account, it is important to know that you need to maintain a monthly average balance (MAB) in each of these accounts so that you do not have to pay a penalty in case of a low balance.
The monthly average balance is the minimum amount you are required to maintain in your savings account every month. Banks calculate it by adding 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 out with your bank how much balance you need to maintain to avoid any charges.
For example, HDFC Bank’s Regular Savings Account has a minimum average balance requirement of Rs 10,000, Rs 5000, and Rs 2500 for urban, semi-urban and rural branches. If the bank goes below the level required the bank charges you a penalty ranging from Rs 600 to Rs 150 depending on the amount of balance. For example, if the balance falls below Rs2500 then Rs 600 penalty 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 2000 and Rs 1000 for metro and urban locations, semi-urban locations, rural and gramin locations, respectively. In case the balance is below the monthly average balance penalty is levied at 6 per cent of the shortfall or Rs. 500 whichever is lower.
In Axis Bank’s Prime Account Rs 25,000 average monthly balance is required and in case it goes below the level then 7.5 per cent of the shortfall or a maximum of Rs 600 has to be paid.
SBI Saving Account has no monthly average balance requirement. Likewise, you don’t need to maintain any minimum balance in case of a salary account.
However, it is important to understand that many people don’t know how the average balance is calculated. This is because it is arrived at by adding up the closing balance in your account every day divided by the number of days in that month. So, if your balance was below the threshold limit for the most part 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 to avoid a penalty in case it goes below the minimum required level.
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