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Banking

What is Minimum Balance?

A minimum balance is the lowest amount you must keep in an account to avoid fees or earn the advertised interest rate. Under Regulation DD, banks must clearly disclose how the minimum balance is calculated, which is commonly determined using the daily balance method or the average daily balance method across the statement cycle.

Failing to maintain the minimum balance triggers a monthly maintenance fee (typically $10 to $25), eroding savings. Some accounts offer lower-tier APYs if the balance drops below the threshold, making it critical for consumers to align their account choices with their typical deposit levels.

Quick Facts

Regulation DD MandateFees and balance calculation methods must be disclosed
Calculation MethodsDaily balance method or Average Daily Balance method
Failing ImpactTriggers monthly maintenance fees and lowers yield
Account TieringHigher tiers unlocking superior APYs and fee waivers

PRACTICAL EXAMPLE

A checking account requires a minimum daily balance of $1,500 to waive a $12 monthly fee. If the account balance drops to $1,400 for even one day during the month, the daily balance method triggers the $12 fee at the end of the statement cycle.

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Learn More Key Concepts

Checking AccountA highly liquid transactional deposit account held at a bank, allowing for frequent deposits and immediate withdrawals.
Savings AccountAn interest-bearing deposit account held at a financial institution, designed for accumulating funds with high liquidity.
Monthly Fee WaiverThe cancellation of a bank account's monthly maintenance fee, triggered by meeting specified deposit or balance criteria.
Bank StatementA periodic summary of all deposits, withdrawals, fees, and interest earned in a bank account over a set cycle.
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