Importance of Average Monthly Balance in Savings Accounts
5 min read | 5 months ago
Average Monthly Balance on Savings Accounts and Why You Should Not Neglect It
According to a survey by NSSO, almost 90% of adults in India have a bank account. And, not just this, 35% of all bank accounts registered in financial institutions belong to women and are either a saving account for housewife, single working women or students. Looking at this number, it is obvious that bank accounts are one of the most important financial instruments in Indian households. And why wouldn't they be? Bank savings accounts keep your money safe while earning interest on your accumulated balance.
However, there's something you need to keep in mind - the minimum average monthly balance (AMB) requirement that usually comes with most savings accounts. In this blog, we will talk about why you should pay attention to your savings account's AMB requirement.
But first, let's take a look at what exactly a minimum average monthly balance is.
Now, the question is, do you have to maintain a minimum AMB for all types of savings accounts? We'll give you the answer to this question.
Do All Savings Accounts Have a Minimum AMB?
Not all savings accounts have a minimum AMB requirement. However, most banks do require a minimum AMB for their regular savings accounts. There are some special non-AMB accounts which do not require the account holder to maintain a specific average balance. But what about special categories of saving accounts? Well, if you have a regular saving account for housewife, student, employed or even senior citizen, you may have to maintain a monthly average balance. The best way to find out whether your account has an AMB or not is to ask your bank.
If your account has a minimum AMB, you must be wondering what will happen if you can't maintain it. There are indeed certain consequences of not maintaining the AMB requirement. Let's take a quick look at them.
Consequence of Not Maintaining Minimum AMB
If you fail to maintain the minimum average monthly balance required by your bank, you will be charged a penalty fee. This fee can range from a few hundred rupees to a few thousand rupees, depending on the bank and the type of savings account you have. Moreover, if you consistently fail to maintain the minimum AMB, your bank will keep charging monthly penalties till you can maintain the AMB limit.
Not being able to maintain the AMB limit on your savings account can be quite concerning for people with low income or inconsistent income. Fortunately, there are a few ways to prevent this from happening.
Alternatives to Avoid AMB Charges on Savings Account
There are several alternatives that you can adopt to avoid incurring charges for not maintaining a minimum AMB on your savings account.
- Remit Money to Account: If you have multiple bank accounts, you can transfer money to your savings account to maintain the minimum balance. This way, you won't have to worry about incurring any charges.
- Low AMB Account: Some banks offer savings accounts with lower minimum AMB requirements. If you cannot maintain the minimum balance required by your current savings account, you can switch to a low AMB account.
- Zero Balance Account: If you want to avoid AMB requirements entirely, you can opt for a Unity Small Finance Bank zero balance account or any other zero balance account offered by banks. These accounts do not require you to maintain any minimum balance. Therefore, you can save your money with no extra worries about AMB penalties and charges.
Conclusion
So there you have it - the reasons why you shouldn't neglect the minimum average monthly balance on your savings account. Not only can it help you avoid fees and penalties, but it can also help you cultivate good financial habits and make progress towards your long-term goals. By keeping an eye on your account balance and taking steps to maintain it, you can ensure that you're making the most of your money and setting yourself up for a brighter financial future.
FAQs
1. Do all types of savings accounts have a minimum AMB?
Almost all savings accounts have a minimum AMB on them. However, if you have chosen a special zero-balance savings account, then you will not have to maintain an AMB limit.
2. What can I do if I can't maintain a minimum AMB on my savings account?
If you can't maintain the minimum AMB on your savings account, you can consider quite a few alternatives, the best one being switching to a low AMB account or a zero balance savings account.
About Unity Small Finance Bank
Unity Small Finance Bank is committed to making banking simpler and more accessible for everyone. Our services include Savings Account, NRI account, Current Account, Fixed Deposits, and Personal Loans offering flexible tenures and attractive interest rates. We also offer financing options like MSME Loans and Microfinance to support businesses and underserved communities. Learn more about Unity Small Finance Bank here.
