What happens when you don't maintain the requisite monthly average balance in your savings account?

When you own a bank account, it is essential to adhere to certain banking norms to manage your finances without any hassles. When it comes to operating your savings account, one such norm is maintaining the account’s monthly average balance (MAB). This is a balance that is supposed to be maintained in the account to avoid charges levied by the bank. By maintaining the account’s required average balance, you can ensure financial stability as well as earn consistent interest. Go through this article to know more about the significant of maintaining the required MAB and what happens when the account balance is not maintained.

Understanding the MAB of a savings account

The monthly average balance is the average amount that you are required to maintain in your savings account over a specific period, usually pa month. It is calculated by dividing the sum of each day's closing balance by the number of days in the month.

While this balance increases your liability, it may serve as a financial cushion, enabling you to meet your needs while ensuring stability in its operations. You can explore various financial institutions and find an account that suits your MAB capabilities. For instance, IDFC FIRST Bank offers flexibility to choose between two different savings account based on MAB requirements: You can opt between the ₹25,000 MAB variant and the ₹10,000 MAB variant, with each account providing its own features and benefits. Depending on your financial plans, you can choose a suitable account. 

Why should you maintain the monthly average balance in your savings account?

Maintaining the monthly average balance in your savings account is key to:

If the monthly average balance falls below the stipulated amount, your bank imposes penalties as per the banking rules. By maintaining the required balance, you can steer clear of these financial penalties, thereby safeguarding yourfunds.

A maintained monthly average balance ensures uninterrupted access to various banking services. IDFC FIRST Bank offers a range of facilities, such as higher daily transactional limits of up to ₹6 lakh, a daily ATM withdrawal limit of ₹2 lakh, including air accident cover of up to ₹1 crore. By adhering to the MAB requirements, you can continue to access these services seamlessly.

Savings Account interest is offered on the maintained monthly average balance for some accounts. By meeting the required balance, customers can maximise the returns on their savings. IDFC FIRST Bank provides competitive interest rates with monthly interest credit, incentivising you to uphold the account’s required monthly average balance and grow your wealth steadily.

A healthy financial record, including the maintenance of your savings account’s monthly average balance, positively influences your relationship with your bank. This can be instrumental when applying for loans or other financial products and getting offered favourable terms that make it easy for you to manage your finances.

Successfully maintaining the monthly average balance fosters financial discipline. It encourages customers to manage their expenses efficiently, thereby contributing to a sound financial strategy. IDFC FIRST Bank values this discipline as a cornerstone of prudent financial management.

What if you don't maintain the account’s monthly average balance?

Neglecting the account’smonthly average balance can lead to adverse consequences. In line with industry practices, you bank may impose penalties, ranging from a fixed fee to a percentage of the shortfall. Additionally, certain banking services may be curtailed or temporarily suspended until the balance is restored. It is imperative to be aware of these repercussions to avoid any disruption in your banking experience.

Can banks charge negative balance for not maintaining MAB?

No, banks typically do not charge a negative balance for failing to maintain the monthly average balance. Instead, they impose penalties or fees for not meeting the stipulated MAB requirements. So, it is essential to be aware of the bank's terms and conditions regarding the account’s MAB to avoid such penalties.

Adhering to the monthly average balance requirements in your savings account is not merely a regulatory obligation but a strategic financial move. By doing so, you not only avoid penalties and maintain access to essential banking services but also foster a disciplined approach to personal finance. IDFC FIRST Bank, with its customer-centric ethos, offer numerous benefits on maintaining a savings account’s MAB and encourages you to embrace these financial practices for a seamless and rewarding banking experience.

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