Guide to Minimum Balance for Savings Accounts

Q: Should I keep a lot of money in my savings account?

A good rule of thumb is to keep at least three to six months’ worth of living expenses in your savings account to cover unexpected bills or events (like a major car or home repair or a job loss). You’ll also want to keep enough in the account to meet any required balance minimum and, in turn, avoid fees.

Q: Why do banks have minimum savings account balances?

Banks impose minimum saving account balances — and fees for not meeting them — to cover the cost of maintaining your account and paying interest. Minimum balances also help banks meet their regulatory capital requirements.

Q: How can I avoid minimum balances?

You can avoid minimum balances by shopping around for an account that doesn’t impose a minimum or charge monthly fees. Some banks, such as many online-only banks, do not require customers to maintain a minimum balance to earn the advertised annual percentage yield (APY) or avoid fees.

Typical Minimum Balance for Savings Accounts

Chris AlexisUpdated March 6, 2023

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

A savings account can be a great place to store money you don’t need right away, such as your emergency fund. These accounts pay interest on your deposits, expressed an annual percentage yield (APY), which helps your savings grow over time. You may, however, need to keep a certain minimum balance in the account in order to earn the advertised APY or avoid monthly account fees. Here’s what you need to know about minimum balances for savings accounts, including what typical minimums are and what happens if your balance dips below the threshold.

What Is a Typical Minimum Savings Account Balance?

Balance minimums vary depending on the bank and the type of savings account.The typical minimum balance on a basic savings account, however, is between $300 and $500. When you open a savings account at a bank or credit union, it’s a good idea to find out if there is a minimum balance requirement and, if so, what it is, as well as what happens if your account dips below that minimum.

How Do Minimum Account Balances Work?

Generally, a minimum account balance is the least amount of money a financial institution requires you to keep in a specific account to avoid fees. For example, a bank might charge a $5 monthly fee for a savings account but waive that fee if you have at least $300 in your savings account at the end of each day.

Types of Minimum Account Balances

There are several different kinds of minimum account balances, including minimum daily balances, average minimum balances, and minimum combined balances. It’s important to understand what your bank requires so you’re not hit with penalties. Here’s a look at each type of minimum account balance and how it's calculated.

Minimum Daily Balance

This is the least amount of money that needs to be sitting in your account every single day if you want to avoid fees and/or earn interest. Typically, your balance may drop below the required amount at any time as long as you meet the balance requirement at the end of the business day (usually 5 pm).

Average Minimum Balance

To come up with the average minimum balance on a savings account, the bank will take the amount of money in your account at the end of each day during a statement period and divide it by the number of days during the statement period.

Minimum Combined Balance

With a minimum combined balance, you need to keep a certain amount of money on deposit at the bank but it can be spread across multiple accounts, such as your checking and savings accounts. For example, let’s say you have a $1,000 minimum combined balance requirement and $500 in your checking account and $1,500 in your savings account. Even if you spend $500 from checking today, you won’t get hit with a fee. That’s because the combined balances of your accounts will be $1,500, well above the $1000 requirement.

Why Do Banks Charge Minimum Balances on Savings Accounts?

Financial institutions require minimum balances for several reasons. For one, account minimums allow them to have more money available to lend to other customers (and earn interest on those loans). For another, account minimums help banks meet regulatory requirements for how much liquid capital they must always have on hand. Finally, account minimums allow banks to make money from the fees they charge for going below those minimums. These fees help cover the cost of maintaining your account and paying out interest.

What Is the Minimum Account Balance Requirement Range?

Minimum balance requirements for a basic savings account at a brick-and-mortar bank range anywhere from $0 to $500, but they typically hover between $300 and $500.The average monthly fee for dipping below the required minimum balance on a basic savings account runs around $5.

How Minimum Account Balance Requirements Vary Among Different Accounts

The type of savings account you open will often impact the minimum balance requirement. If you open a high-interest savings account at a traditional bank, for instance, you may face a relatively high minimum balance requirement, anywhere from $3,000 to over $20,0000, and incur a stiff fee (from $12 to $20 per month) if you dip below the minimum.If you opt for a high-yield savings account at an online bank, however, you may not have any minimum balance requirement. The reason is that online-only banks have lower overhead and are often able to pass that savings to their customers in the form of low, or no, fees, along with higher APYs.

What Happens if You Don’t Maintain the Minimum Balance?

Generally, if you don’t maintain the minimum balance, you will get hit with a monthly maintenance fee on your account. In some cases, however, you may need to keep a minimum balance to earn a certain amount of interest. If you dip below that minimum, you might earn no interest or a lower APY.

Tips for Staying Above Your Bank’s Minimum Balance

Fortunately, there are a number of steps you can take to avoid minimum balance requirements and their associated fees. Here are some to consider.

Sign Up for Direct Deposit

Arranging to have your paycheck automatically deposited into your account can help ensure you don't dip below the minimum balance requirement. Many employers will allow you to split your direct deposit so that some of your paycheck goes into your checking account and some goes into your savings account.

Activate Recurring Transfers

Banks will often waive the minimum balance requirements and monthly fees on a savings account if you set up a recurring transfer from your checking account into your savings account. The monthly transfer can be small — $25 is often all you need to transfer per month to sidestep a minimum balance requirement and monthly account fees.

Know Your Bank’s Minimum Balance Requirements

To avoid dipping below a balance minimum, you need to know exactly what it is. You can often find your account’s minimum balance requirements on the bank’s website or by logging into your account.

Shop Around

Not all banks impose minimum balance requirements. For example, online-only banks typically don’t. It can pay off to shop around for a savings account that offers a higher APY than the average savings account interest rate and doesn’t charge a monthly fee (or reduce the APY) for dipping below a certain minimum balance.

Open Up Multiple Accounts at the Same Bank

Banks will often waive balance minimums and monthly fees if you open more than one account, such as a checking account and a savings account. Or, they may impose a combined monthly minimum balance, which can be easier to meet.Recommended: How Many Bank Accounts Can and Should You Have?

The Takeaway

Banks often impose minimum balance requirements on savings accounts. If you don’t meet the minimum, you may get hit with a fee and/or lose any interest you were set to earn that month. The best way to avoid minimum balance requirements is to open a savings account that doesn’t impose limits or charge monthly fees. With Lantern by SoFi’s online banking marketplace, it’s easy to compare high-yield savings accounts based on APY, fees, and balance minimums.Lantern can help you compare online savings accounts and find today’s best rate.

Frequently Asked Questions

Should I keep a lot of money in my savings account?

Why do banks have minimum savings account balances?

How can I avoid minimum balances?

Photo credit: iStock/nd3000

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About the Author

Chris Alexis

Chris Alexis has been putting pen to paper and fingertips to keyboard since his youth. He ultimately grew into an accomplished and award-winning writer who loves using the power of language to connect with audiences. He also strongly enjoys learning about who he is writing for so he can create something that will truly resonate with them. He has worked for a variety of companies, each of which have given him more experience and insight.

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