The higher the balance in the savings account, the higher are the chances of getting returns in the form of interest.
Average Minimum Monthly Balance is the average amount you are required to maintain in your savings or current account in a calendar month. Unlike the minimum daily balance amount, the minimum monthly balance is calculated based on the average of your daily closing balance amount throughout the month. At the end of every month, the bank calculates whether you have met the required average minimum monthly balance. If you do not do this, you may have to pay charges or fine to the bank. If you maintain average minimum monthly balance, there are some benefits which we discuss here.
You will learn financial discipline
Maintaining a minimum average balance each month in a bank account or savings bank account can potentially discourage you from making non-essential withdrawals or purchases and help promote an attitude towards saving. By doing this, you develop the habit of maintaining financial discipline which can prove helpful for you.
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 are better prepared to repay your loan on time.
Benefit of higher interest and special offers also
The higher the balance in the savings account, the higher are the chances of getting returns in the form of interest. Under the bank’s savings account, you can avail special offers on debit and credit cards, lifestyle benefits, reward points as well as preferential pricing on certain products like personal loans.
Depending on the category of banks and area
The average minimum monthly balance requirement depends on the category of different banks and areas. The conditions of private banks are more stringent than those of government banks. To maintain minimum monthly balance in the account, you will have to maintain your budget in a disciplined manner.
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