Minimum balance requirements can be a major hurdle for people who need bank accounts. In fact, among the “unbanked” (those who do not have a traditional bank account), the main reason they give for not having an account is that the minimum balance requirements are too high.
Minimum balance requirements vary by checking account, but can be up to $2,500. Fortunately, there are many accounts that have no requirements.
A minimum balance on a checking account is the lowest balance you can maintain without incurring a monthly maintenance fee or facing other penalties, such as forfeiting the month’s interest.
Why do some banks have minimum balance requirements? They serve several purposes, including helping to protect the bank and helping you, the customer. Here’s how useful minimum balance requirements are:
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cash reserves: They help banks meet their reserve requirements and prevent bank failures that would result from massive cash withdrawals.
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Bank charges: They help banks ensure they will have money available to fund loans and cover operating costs associated with managing accounts.
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Account stability: They discourage you from overdrafting and incurring additional fees or having your account closed involuntarily.
For some people, accounts with high minimum balance requirements are preferable, as they tend to have valuable features, such as higher interest rates or loan discounts.
But high minimum balances can be detrimental to other customers. In particular, customers with lower incomes end up paying more for low balance fees.
Read more: Why do some banks charge monthly maintenance fees?
There are several methods a bank can use to determine whether or not it meets the minimum balance requirement, and the method varies by account. They include:
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Minimum balance: Your balance must remain at or above the minimum at all times during the month, or you will be charged a fee.
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Minimum daily balance: At the end of each business day, your balance must be equal to or greater than the minimum required amount. If your balance drops below the minimum in a single day, you will be charged a fee.
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Average daily balance: The bank adds up your daily closing balances for each day of the month and divides that figure by the number of days in the month. If this average is below the minimum requirement, you will be charged a fee.
In some cases, the bank may also use the combined balances of all your accounts to meet the requirement.
To understand your account requirements and see how your minimum balance is calculated, take a close look at your account disclosure information.
If your account falls below the minimum required balance, several things can happen. In some cases, the bank may withdraw money from a linked savings account to cover the shortage.
However, you may be charged a low balance fee, a monthly maintenance fee, or lose the ability to earn interest during the month. One way to avoid a low balance fee is to set an alert to let you know when you’re approaching the minimum.
As for monthly maintenance fees, you may be able to get them waived even if you fall below the minimum balance. For example, some banks will waive the fee if you have a certain number of debit transactions or direct deposits into your account within a given month.
Just remember that even if the account doesn’t have a minimum balance, you may still face fees for going below a $0 balance, including bounced check and overdraft fees.
Read more: How much can I overdraw my checking account?
Below we discuss the minimum checking account balance requirements among the six major banks. These minimums are necessary to avoid fees and/or obtain the highest advertised interest rate.
Keep in mind that many of these accounts offer alternative ways to avoid monthly fees beyond maintaining the minimum balance, such as setting up direct deposit or joining the bank’s rewards program.
Before opening an account, verify account details directly with the bank and make sure you understand all requirements necessary to waive fees.
Bank of America offers a few different checking account options. Generally, the higher the minimum balance requirement, the more features the account will include.
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SafeBalance Banking: $500 minimum daily balance (or $4.95 monthly fee; waived for account owners age 25 or younger)
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Advantage Plus Banking: Minimum daily balance of $1,500 (or monthly fee of $12)
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Relationship Banking with Advantages: Minimum daily balance of $20,000 (or monthly fee of $25)
Capital One offers a standard checking account: the 360 Checking Account. There is no minimum balance requirement and there are no fees to open, maintain or use your Capital One 360 Checking account.
Read more: Capital One Review
Chase Bank offers a variety of checking accounts, including student checking accounts and private client checking accounts. Below are standard Chase checking accounts and the associated minimum balance requirements.
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Chase Secure Banking: No minimum balance; You must have electronic deposits made to the account totaling $250 or more (or a monthly fee of $4.95)
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Chase Total Checking: Minimum daily balance of $1,500, or an average daily starting balance of $5,000 or more on any combination of this account and linked, qualifying Chase checking, savings, and other balances (or $12 monthly fee)
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Chase Premier Plus Checking Account: Average daily opening balance of $15,000 or more in any combination of this account and linked qualified deposits/investments (or $25 monthly fee)
Read more: What is private banking and how does it work?
TD Bank offers three types of checking accounts; The higher the minimum balance requirement, the more features and benefits the account will include.
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Complete TD Check: $500 minimum daily balance (or $15 monthly fee)
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TD beyond verification: Minimum daily balance of $2,500 (or monthly fee of $25)
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TD Essential Banking: No minimum balance requirement, $4.95 monthly fee (waived for account owners ages 13-17)
US Bank offers two checking accounts, each with different requirements and benefits.
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Smart Bank Check: Minimum average account balance of $1,500 (or monthly fee of $6.95)
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Secure Debit Account: No minimum balance, $4.95 monthly fee
Wells Fargo has several checking account options designed to meet the needs of different types of customers. While minimum balance requirements vary, all accounts require a minimum of $25 to open.
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Clear Access Banking: No minimum balance requirement, $5 monthly fee (waived for account owners ages 13-24)
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Daily check: $500 minimum daily balance (or $10 monthly fee)
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Primary checking account: $20,000 or more in qualifying linked balances at checkout (or $25 monthly fee)
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Premier Checking Account: $250,000 or more in qualifying linked balances at checkout (or $35 monthly fee)
Learn more about minimum balance requirements:
What is the difference between minimum opening deposit and minimum balance?
The minimum opening deposit is the initial amount you need to deposit to open a bank account. The minimum balance is the lowest balance you can maintain in the account each month to avoid a monthly fee or lose certain benefits. Depending on the account, the minimum opening deposit and minimum balance may or may not be the same amount.
You’re more likely to find an account that doesn’t have a minimum balance requirement if you look for one at an online bank or credit union. For example, all of the checking accounts that appear on our list of the 10 best free checking accounts have no minimum balance requirements. For accounts with flexible requirements, you can also check to see if you qualify for a second chance checking account or a student checking account.
The fee for going below the minimum required balance in your checking account depends on the account. You typically have to pay an account maintenance fee that ranges from $5 to $25.
Read more: How to Get Overdraft Fees Refunded