Monday, August 22, 2016

Savings Account Minimum Balance


Savings Account Minimum Balance

Many banks, depending on the type of savings account, charge a maintenance fee when the balance of funds in the account drops below a certain number.

For example, Mr. Babu has a savings bank account in Bank A.

Bank A has a minimum balance requirement of Rs.10,000 at any given time. Mr. Babu conducts transactions with amounts being debited and credited every so often, and incurs no additional charges as his account balance is always above Rs.10,000.

If his account balance drops to even Rs.9,000, he will start to face “maintenance charges” being levied on his account by Bank A. Let’s say Bank A charges Rs.500 as maintenance, this means that if Mr. Babu cannot raise the balance in his bank account to at least Rs.10,000, the bank will charge him this fee every month.

So, if Mr. Babu doesn’t raise his account balance and has no transactions in this account – in 18 months, Mr. Babu’s account will show a balance of Rs.0, as Rs.500 is being deducted every month. Rs.500 x 18 months = Rs.9000.

Banks charge anywhere between Rs.200 to Rs.800 as maintenance for the savings account every month that the minimum balance is below the prescribed amount.

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