When an individual opens a savings bank account, he/she is required to maintain the minimum balance in the account as per the bank's policy. If the minimum balance in the account is not maintained, then a penalty will be levied by the banks.
If your account goes below the minimum required balance, a number of things can happen. In some cases, the bank may draw money from a linked savings account to cover the shortage. However, you might be charged a low-balance fee, a monthly maintenance fee, or lose your ability to earn interest for the month.
Unless you've come to a new agreement with your creditor, consistently making less-than-minimum payments will eventually end with you defaulting on the account, which will more than likely put the account into collections.
Falling Below Minimum Balance Fee will be collected if account falls below the required minimum MADB for two consecutive months. Account Dormancy Fee will be collected if account is dormant and falls below the minimum MADB. A savings account is dormant if it has no client-initiated activity for two (2) years.
What it is. Some banks require you to maintain a certain minimum balance in your account. For example, you could be required to keep a minimum of $100 in your account at all times. If your balance falls below that amount, you end up with a fee.
Myth About Automatic Closure:
Contrary to the layman's opinion, the zero balance itself does not automatically close the very day of the zero balance. The dynamic nature of business always makes banks look at this as a cyclical fluctuation; they may normally see periodic declines to zero on any given date.
If you don't maintain the required minimum balance, you will be liable to pay your bank a non-maintenance fee. The non-maintenance fees may differ based on branch location and other factors.
Many banks and credit unions require you to keep a certain amount of cash in your bank account, whether it's a savings, checking or money market account. The minimum balance requirement is the specific amount of money you'll need to keep in the account at all times to enjoy certain benefits or avoid fees.
If your credit card statement reflects a zero minimum payment due - even if you have a balance on your card - it is because of recent, positive credit history. A review of your recent credit history and determination to waive your minimum monthly payment allows you to skip your monthly payment for a statement cycle.
You could face fees
Failing to make at least the minimum payment results in late fees, which can be as high as $41 if you miss the payment deadline by more than 30 days. Every missed payment increases your balance, making it harder to get out of debt.
- Lowest intermediate balance rule: Where the trustee spends trust funds in a mixture in breach of trust and then adds their own funds to the mixture, the later addition is not presumed to be intended to replace trust money.
Banks measure and enforce the minimum balance in different ways. If the account falls below the minimum balance it may be assessed fees, denied interest payments, or closed.
However, in a financial crunch, you can choose to pay the minimum balance. What Happens if I Pay Less than the Minimum Balance? In case you pay less than the minimum balance, it will negatively impact your credit score.
According to RBI guidelines, your savings account balance can be brought down to zero due to failure to maintain the minimum balance, but it cannot go into negative. Therefore, there is no need for you to make any extra payments to close your old bank account.
Involuntary bank account closures are often due to inactivity, suspected fraud, excessive overdrafts, or failure to meet minimum balance requirements.
Falling Below Minimum Balance Fee will be collected if account falls below the required minimum MADB for two consecutive months. Account Dormancy Fee will be collected if account is dormant and falls below the minimum MADB. A checking account is dormant if it has no client-initiated activity for one (1) year.
Unless your bank has set a withdrawal limit of its own, you are free to take as much out of your bank account as you would like. It is, after all, your money. Here's the catch: If you withdraw $10,000 or more, it will trigger federal reporting requirements.
In banking, a minimum daily balance is the minimum balance that a banking institution requires account holders to have in their accounts each day in order to waive maintenance fees.
The Bank may impose and collect service charges and/or maintenance fees on Accounts, whether active or dormant, where the Account balances: (i) have fallen below the required minimum monthly ADB, for dormant accounts; and (ii) have fallen below the required monthly minimum ADB for at least two (2) consecutive months, ...
What happens if I don't have enough money in my checking account to cover a bill? Just as with a paper check, it's important to maintain sufficient funds in the account to cover all payments. Please note that you may be charged a non-sufficient funds (NSF) fee for payments returned for insufficient funds.
Some — but not all — banks require you to keep a certain amount of money in your savings account to avoid fees. If you're interested in opening a new savings account, you may have come across accounts that have minimum balance requirements.
Banks usually charge penalty fees if the minimum balance requirement is not met. These charges vary from bank to bank and may be deducted directly from the account balance. The bank may notify the account holder through SMS, email, or physical mail if the account falls below the minimum balance threshold.
Not enough activity with your account
According to HelpWithMyBank.org (a website run by the federal agency charged with regulating national banks), an account is considered abandoned or unclaimed when there is no customer-initiated activity or contact for a period of three to five years.
Key Takeaways
Your bank may close your account and send you to collections if you're always in overdraft and/or don't bring your account up to date. An overdraft occurs when your account falls below zero. Your bank will let your account become negative if you have overdraft protection but you may face fees.