5 Benefits of Maintaining a Minimum Balance in Your Bank Account That Will Keep Both Your Wallet and CIBIL Score in Top Shape!

Maintaining a minimum balance in your bank account isn't just about avoiding penalties.  Maintaining the correct Average Monthly Balance (AMB) can provide free banking facilities, insurance coverage, easier loan approvals, and a better CIBIL profile. So, let's explore its 5 major benefits.

If you have a savings account in any bank, you must have heard of 'Average Monthly Balance' (AMB). While many banks have now eliminated the hassle of a minimum balance for their customers, some banks still follow this practice. This is why we often get annoyed when we receive a message from the bank saying our balance is low and we need to deposit money. We feel that the bank is just looking for an excuse to impose a penalty on us. But have you ever considered the benefits of maintaining a fixed amount in your bank account?

Yes, maintaining an average monthly balance is not just a compulsion, but it can be a part of smart banking. If you maintain it properly, the bank offers you facilities for which others pay hefty fees. So, let's learn about the amazing benefits of maintaining AMB that will make your life easier.

1. Freedom from Penalties and Heavy Fines

The first and most direct benefit is that your hard-earned money doesn't go towards penalties. Nowadays, different banks charge penalties ranging from ₹200 to ₹600 if the balance falls below the minimum.

Smart Tip: Yes, if you maintain the AMB, you can save ₹2,000 to ₹5,000 annually just by avoiding penalties. You can invest this money later.

2. Enjoy Free Chequebooks and ATM Transactions

In fact, many banks always offer some extra facilities to their good customers. So, if your account maintains a healthy balance, then:

ATM Transactions: The bank may increase the limit on the number of free ATM transactions you receive each month.

Checkbook: Many banks offer one or two checkbooks for free each year. However, if the balance is low, you might have to pay for each page.

DD and Pay Orders: Banks often offer significant discounts on the charges for issuing demand drafts.

3. Access to 'Free' Insurance

It's worth noting that this is a benefit that people often overlook. Some banks offer complimentary personal accidental insurance and air accident cover to customers who maintain a specific balance (such as ₹25,000 or ₹50,000).

Benefits: You don't have to pay any separate premium for this. Just maintain the required balance in your account, and the bank may provide you with insurance coverage for free.

4. Loans and Credit Cards Become Easier to Obtain

Yes, when you apply for a home loan, car loan, or personal loan from a bank, the bank also considers your 'repayment capacity'.

Bank's Trust: So, if your account consistently maintains a good average monthly balance (AMB), the bank often perceives you as financially stable and capable of repaying the money on time.
Pre-Approved Offers: Customers with good balances may receive 'pre-approved credit card' and 'instant loan' offers from the bank without any documentation.

5. Premium Banking and 'Relationship Manager' Facility

If you maintain an average balance of ₹1 lakh or more in your account, the bank may categorise you as a 'premium customer'.

No Waiting: This means you don't have to wait in bank queues, and you receive priority service.

Relationship Manager: The bank assigns you a personal manager who can handle all your banking-related tasks over the phone. Airport Lounge Access: Many debit cards offer the benefit of free airport lounge access.

How is AMB (Average Monthly Balance) calculated?

This is where we often make a mistake. Average monthly balance doesn't mean that you need to have that amount in your account every single day.

Example: Let's say your AMB requirement is ₹10,000. If you keep approximately ₹20,000 in your account for the first 15 days of the month and then have a zero balance for the next 15 days, your average balance will still be considered around ₹10,000. This means you can withdraw and deposit money as needed, as long as the monthly average is maintained.

Maintaining a balance is not a loss; it's an investment.

It's important to know that maintaining a minimum balance in your bank account isn't just a bank rule, but also beneficial for your own financial health. It not only helps you avoid unnecessary expenses but also improves your reputation with the bank. The next time you receive a message about maintaining your balance, consider it not as a threat of penalties, but as an opportunity to maintain your banking privileges. (Note: This information is for general knowledge only; please contact your bank for more details.)

FAQs related to the news:

1. What is Average Monthly Balance (AMB)?

AMB is the average of your daily balance throughout the month, not a fixed amount you need to maintain every day.

2. What are the consequences of not maintaining the minimum balance?

The bank may deduct a penalty of ₹200–₹600, and several free services may be discontinued.

3. Does maintaining a balance make it easier to get a loan?

Yes. A consistent balance demonstrates your financial stability to the bank, and loan/credit card applications may be approved more quickly.

4. Does maintaining a minimum balance provide insurance coverage?

Many banks offer free personal and air accident insurance on maintaining a certain balance.

5. How much balance is required to get premium services?

Generally, an AMB of ₹50,000 to ₹1 lakh or more qualifies you for premium banking services and a dedicated relationship manager.