If you’re just getting started in the world of bank accounts, you might be looking for an option that will allow you to have a bank account, but keep a low balance.
Bank accounts with no minimum balance requirements may be an excellent choice for those who want to bank, but don’t have a big balance.
What is a minimum balance?
A minimum balance is as simple as it sounds: it is the least amount of money that your bank permits you to have in your bank account.
This rule may only apply when opening the account, meaning that the bank requires a certain amount of funds to be deposited when the account is opened. It could also apply to your ongoing balance after your account is opened.
Banks apply this rule to accounts in order to encourage account holders to keep a certain amount of funds in their account at all times.
Are there penalties for dropping below a minimum balance?
Penalties and fees vary greatly from bank to bank. Generally, banks require you to have a minimum balance in your account to avoid paying maintenance fees.
This means that rather than charging you with a penalty, they’ll charge you with a maintenance fee when your balance drops below their specified minimum.
How do you avoid paying a minimum balance fee?
If your bank account requires a minimum balance each month, there are a few steps you can take to prevent the fee from being applied.
First, it’s important to know when your bank applies the minimum balance fee. They may assess at the end of each business day, calculate your average monthly balance, or charge on a certain day of the month. If you know when the fee is charged, it can help you manage your balance to ensure it doesn’t meet the minimum balance fee criteria.
Another way to avoid the minimum balance fee is to set up a direct deposit into your bank account. When you have your monthly salary put directly into your bank account, you’ll find that your balance will stay higher, and therefore you may avoid minimum balance fees.
If you’re a student or under the age of 25, you may be eligible for certain fees to be waived. Ask your bank about possible options to avoid paying a monthly or minimum balance fee.
How do you find a bank account with no minimum balance?
Many banks offer bank accounts with no minimum balance required, particularly for students and young people. When searching for accounts without a minimum balance requirement, be sure to ask about both a starting balance minimum and an ongoing balance minimum. This will help you understand how to manage your funds to avoid minimum balance fees.
If you’re ready to bank but don’t tend to have a big balance, then finding a bank account with no minimum balance requirements may be a great place to start. Build your balance or just keep a little without having to worry about paying pesky minimum balance fees.