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What’s a minimum balance and deposit requirement?
Dipping below your bank’s minimum balance can mean high fees or a lower APY.
Minimum deposits and balance requirements apply to most deposit accounts, such as checking, savings, certificates of deposit (CD) and more. Minimum requirements can affect everything, such as the interest rate you earn, the monthly fee you’ll pay and your eligibility to open an account.
What’s a minimum balance requirement?
A minimum balance requirement is a stipulation that says you must keep a minimum amount in an account on a daily or monthly basis, either to keep the account open, earn certain benefits or avoid fees.
There are four types of account minimum requirements:
- Opening deposits. The amount you’re required to deposit upon opening an account and can range from $1 to $1,000 or more, depending on the type of account. In some cases, meeting an opening deposit requirement can mean earning a one-time signup bonus.
- Minimum balance to earn APY. Many savings accounts or CDs require you to deposit or keep a certain minimum balance to earn a higher annual percentage yield (APY).
- Minimum balance to avoid a fee. Common with checking accounts, some banks offer to waive monthly maintenance fees if you maintain a minimum balance.
- Minimum balance to earn rewards. Some accounts offer rewards or relationship tiers for holding a certain balance, such as travel perks, ATM reimbursements, free checks or higher APYs.
Accounts with minimum balance requirements
These accounts are most likely to have minimum balance requirements, but the reasoning behind them varies and so can the actual balance required.
- Checking accounts may require a minimum balance to avoid a monthly service fee, and some also require an opening deposit.
- Savings accounts typically require an opening deposit, often around $100 or more. Many savings accounts also have tiered average daily or monthly balance requirements, in which an average balance is required to enter a tier with a higher APY.
- Money market accounts, or MMAs, typically have a minimum opening deposit or minimum balance requirements to avoid monthly service fees or earn a tiered APY.
- Cash management accounts, or CMAs, often require an opening deposit or have required minimum balances to earn an APY or avoid monthly fees.
- CDs almost always require an opening deposit to open, which doubles as the minimum balance requirement. A CD offers a fixed rate, and the minimum balance requirement typically ranges from $250 to $2,500. They offer guaranteed returns, with your minimum deposit amount acting as the initial investment amount that grows over time.
How to avoid minimum balance fees
There are two easy ways to avoid a minimum balance fee:
- Choose an account that has no minimum balance requirements, or
- Choose an account with a balance requirement that you can easily meet.
Not many checking accounts or run-of-the-mill savings accounts require minimum balances. But once you get into premium checking accounts with cashback rewards or travel perks or ones that are interest-bearing, you may need to deal with minimum balances.
It’s a bit of a balance — if you want an account with all the bells and whistles, you may face balance requirements. But if you just need a regular account without the extra features, there are plenty of free accounts without minimum balance requirements.
Compare bank accounts with low minimums
Minimum requirements for savings and checking accounts can vary widely. Narrow down top accounts by opening deposits, APYs and more. For a closer comparison, tick the Compare box to see multiple accounts side by side.
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How much are you willing to deposit?
On average, most Americans are willing to deposit $4,482 when opening a regular savings account.
Bottom line
Minimum deposit and balance requirements can determine the interest-earning power of your savings account or CD and the ongoing cost of your checking account. Consider these restrictions, along with the other features and fees of different bank accounts, before making the final decision about the right product for you.
Frequently asked questions
What happens if I go below a minimum balance?
It depends on the bank and the type of account, but you’ll likely pay a fee, lose perks that come with meeting the minimum balance or risk the bank closing your account. For example, if you were required to maintain a $1,000 balance in your tiered savings account to earn a 5% APY on your balance, and your balance is under that minimum, you’ll likely drop to a lower APY tier.
What’s a daily minimum balance mean?
It means that you’d be required to keep a certain balance in your account every day. For balance requirements like this, the bank may close your account if you drop below that minimum balance and don’t resolve it quickly.
Do credit cards have minimum balance requirements?
Credit cards aren’t deposit accounts, so they don’t have minimum balance requirements. They have credit limits, which is the maximum amount you can borrow. You’ll also have a minimum payment, which is the amount you must pay each month to keep your account in good standing if you have an outstanding balance, which is typically a percentage of your owed amount.
For secured credit cards, you’ll have an opening deposit requirement, which also sets your credit limit and is used to cover your balance if you can’t pay off your balance. Other than the security deposit, secured cards work just like other traditional credit cards, with the exception of debit-credit cards.
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