Minimum balance requirements can be a major barrier for people who need bank accounts. In fact, among the “unbanked” (those who don’t have a traditional bank account), the main reason they give for not having one is that the minimum balance requirements are too high.
Minimum balance requirements vary by checking account, but can be up to $2,500. Fortunately, there are many accounts without any requirements at all.
The minimum balance in a checking account is the lowest balance you can carry without incurring monthly maintenance fees or facing other penalties, such as losing interest earnings for the month.
Why do some banks impose a minimum balance? They serve a number of purposes, including helping protect the bank and you, the customer. Here’s how useful minimum balance requirements are:
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Cash reserves: It helps banks meet their reserve requirements and prevents bank failure that might result from mass withdrawal of funds.
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Bank expenses: It helps banks ensure that they have funds to finance loans and cover operational costs associated with managing accounts.
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Account stability: Prevents you from overdrafting, incurring additional fees, or forcibly closing your account.
For some people, accounts that require a high minimum balance are preferable, since they tend to have valuable features, such as higher interest rates or loan discounts.
But high minimum balances can be harmful to other customers. In particular, low-income customers end up paying the bulk for low balance fees.
Read more: Why do some banks charge monthly maintenance fees?
There are a number of methods the bank can use to determine whether or not you meet the minimum balance requirements, and the method varies by account. They include:
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Minimum balance: Your balance must remain at or above the minimum at all times during the month, or you will be charged a fee.
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Minimum daily balance: At the end of each business day, your balance must be at or above the minimum requirement. If your balance drops below the minimum in just one day, you will be charged a fee.
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Average daily balance: The bank adds your daily closing balances for each day of the month and divides this number by the number of days in the month. If this average is less than the minimum required, you will be charged a fee.
In some cases, the bank may also use the combined balances across your accounts to fulfill requirements.
To understand your account requirements and learn how your minimum balance is calculated, take a closer look at your account statement information.
If your account drops below the minimum required balance, a number of things can happen. In some cases, the bank may withdraw funds from a linked savings account to cover the shortfall.
However, you may be charged low balance fees, monthly maintenance fees, or you may lose your ability to earn interest for the month. One way to avoid low balance fees is to set up an alert so you know when you’re getting close to the minimum.
As for the monthly maintenance fees, you may be able to waive them even if your balance drops below the minimum balance. For example, some banks will waive fees if you have a set number of debit transactions or direct deposits to your account during a given month.
Just remember that even if the account doesn’t have a minimum balance, you can still face fees for getting the balance below $0, including returned check and overdraft fees.
Read more: How much can I overdraft from my current account?
Here’s a look at the minimum checking account balance requirements among six major banks. These minimums are required to avoid fees and/or obtain the highest advertised interest rate.
Keep in mind that many of these accounts offer alternative ways to avoid monthly fees beyond maintaining a minimum balance, such as setting up direct deposit or joining a bank’s rewards program.
Before opening an account, check the account details directly with the bank and ensure you understand all requirements for fee waiver.
Bank of America offers a few different checking account options. In general, the higher the minimum balance requirement, the more features the account comes with.
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SafeBalance Banking: Minimum daily balance of $500 (or monthly fee of $4.95; waived for account holders age 25 or younger)
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Advantage in addition to banking services: Minimum daily balance of $1,500 (or $12 monthly fee)
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Advantage of banking relationships: Minimum daily balance of $20,000 (or $25 monthly fee)
Capital One offers one standard checking account: the 360 Checking Account. There is no minimum balance and no fees to open, maintain, or use the Capital One 360 Checking Account.
Read more: Capital One Review
Chase Bank offers a variety of checking accounts, including student checking and private customer checking. Here’s a look at Chase’s standard checking accounts and their associated minimum balance requirements.
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Chase Secure Banking: There is no minimum balance; You must have electronic deposits to the account totaling $250 or more (or a monthly fee of $4.95)
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Chase comprehensive examination: Minimum daily balance of $1,500, or average starting day balance of $5,000 or more in any combination of this account and linked eligible Chase checking, savings, and other balances (or a $12 monthly fee)
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Check Chase Premier Plus: Average starting day balance of $15,000 or more in any combination of this account and associated qualifying deposits/investments (or $25 monthly fee)
Read more: What is private banking and how does it work?
TD Bank offers three types of checking accounts; The higher the minimum balance requirement, the more features and perks the account comes with.
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Full TD Check: Minimum daily balance of $500 (or $15 monthly fee)
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TD after verification: Minimum daily balance of $2,500 (or $25 monthly fee)
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TD Basic Banking: No minimum balance, $4.95 monthly fee (waivable for account holders ages 13-17)
U.S. Bank offers two checking accounts, each with different requirements and perks.
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Check the bank smartly: Minimum average account balance is $1,500 (or a monthly fee of $6.95)
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Secure Debit Account: No minimum balance, $4.95 monthly fee
Wells Fargo has several checking account options designed to meet the needs of different types of customers. While minimum balance requirements vary, all accounts require at least $25 to open.
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Clear access to banking services: No minimum balance, $5 monthly fee (waivable for account holders ages 13-24)
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Daily inspection: Minimum daily balance of $500 (or $10 monthly fee)
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Initial verification: $20,000 or more in eligible linked balances at the end of statement (or $25 monthly fee)
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Prime Minister’s examination: $250,000 or more in eligible linked balances at the end of statement (or $35 monthly fee)
Learn more about minimum balance requirements:
What is the difference between the minimum opening deposit and the minimum balance?
The minimum opening deposit is the initial amount you need to deposit in order to open a bank account. The minimum balance is the lowest balance you can keep in the account each month to avoid monthly fees or lose some benefits. Depending on the account, the minimum opening deposit and minimum balance may or may not be the same amount.
You’re likely to find an account that doesn’t have minimum balance requirements if you’re looking for an account at an online bank or credit union. For example, all of the checking accounts on our list of the 10 best free checking accounts have no minimum balance requirements. For accounts with flexible requirements, you can also check to see if you qualify for a Second Chance Checking or Student Checking account.
The fee for going below the minimum required balance in your checking account depends on the account. Typically, you have to pay an account maintenance fee ranging from $5 to $25.
Read more: How to recover overdraft fees