Why Banks Require a Minimum Balance

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Many financial institutions require a minimum balance to open an account, earn a higher interest rate and avoid a service fee — or any combination of these things. In short, they need to be able to make more money from your deposits than you cost them to maintain your accounts. Learn how to avoid a minimum balance requirement and stop paying bank fees.

Why Do Banks Require a Minimum Balance?

Financial institutions impose minimum balances because, simply put, customers cost them money. Your bank or credit union has to pay overhead to run branches, maintain accounts, deliver customer service and more. At the end of the day, a bank is still a business and businesses need to make money.

What Is a Minimum Balance?

A minimum balance is the least amount of money that you’ve had in your bank account during the whole month. Minimum balance fees can add up, so make sure you know what you’re getting into up front, and try to find a bank with free checking and no minimum balance requirement. Several different types of minimum balance requirements exist, including:

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Check Out: Banks Offering Free Checking With No Minimum Balance

Banks With No Minimum Balance Required

Not all financial institutions require minimum balances; some still offer a free, no-minimum-balance checking account — that is, a free savings account with no minimum balance requirement. Because these minimum-free accounts can be harder to find, however, it’s good to know there are other places where you can bank without having to worry about maintaining a required balance.

An online bank, for example, often falls into the category of banks with no minimum balance required. Online banks have almost no overhead because they don’t operate brick-and-mortar branches and can reduce or eliminate checking account minimum balance requirements. Because credit unions are nonprofits — they are owned and run by their members — they use their earnings to reward their members with better rates, eliminate maintenance fees and offer no minimum deposit requirements.

How to Avoid Minimum Balance Requirements

Sometimes banks require you to maintain a minimum balance, but you might be able to circumvent that stipulation. Here are a few ways you can avoid a minimum balance requirement:

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Related: Best Free Student Checking Accounts

Make the Switch

You probably have enough to worry about financially than constantly having to check your bank balance to make sure you’re not being charged for going below the minimum. If you’re tired of banking at a place that requires a specific balance, research your options and switch to a financial institution that doesn’t have such a requirement, or take one of the aforementioned tips.

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