When you work hard for your money, it’s not fun to see any of it slip away due to monthly bank fees. And, since information about bank fees is often tucked deep into the fine print of your account details, these debits to your account may come as an (unpleasant) surprise.
One of the most common recurring bank fees is the minimum balance fee, also known as the monthly account maintenance or service fee. This fee generally kicks in if your account balance drops below a certain amount at some point during the month.
Fortunately, monthly account fees aren’t just something you have to accept. Read on to learn more about minimum balance service fees, including how to know if your bank charges them and what you can do to avoid monthly maintenance fees entirely.
Minimum Balance Fee Definition
A minimum balance fee is a fee that many banks charge when your account balance dips below a certain dollar amount. For example, if the minimum balance required in your checking account is $500, but you only have $450, you would be charged a minimum balance fee.
These fees are often presented as account maintenance charges, with exceptions for account holders who maintain a monthly minimum balance in their account. Typically, the major national banks require you to maintain a minimum balance of around $300 to $500, although it can be more, to avoid monthly service fees.
There are different types of minimum balance requirements. A bank may define a minimum balance in one of these three ways:
• Minimum balance This typically means your account balance cannot drop below the specified amount at any time during your statement cycle or you will be charged a fee.
• Minimum daily balance Often used for checking accounts, this means your balance can drop below the required amount at any point during the day as long as you meet the balance requirement at the end of the business day.
• Average minimum balance Here, the bank takes the amount of money in your account at the end of each day during a statement period and divides it by the number of days during the statement period. If your average balance was below the minimum, you would get hit with a maintenance fee.
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How Much Is a Typical Minimum Balance Fee?
A recent Bankrate study found that, on average, financial institutions are charging $5.31 per month in maintenance fees for non-interest-bearing checking accounts and $15.33 for interest checking accounts. That adds up to roughly $64 and $184, respectively, per year. Keep in mind, though, that this is just the average — minimum balance fees can be even higher at some banks.
Minimum balance fees are typically automatically deducted from your account.
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6 Tips for How To Avoid Minimum Balance Fees
There are a number of ways to avoid getting hit with a minimum balance fee. Here are some to consider.
1. Keeping Your Account Above the Minimum Balance
Perhaps the most obvious way to avoid a minimum balance fee is to keep your account balance above the stated minimum amount. However, this might take some effort on your part.
First, you’ll need to read the fine print in your account information, or call your bank, to find out what the minimum balance is and — equally important — how it’s calculated. In some cases, you may be penalized for having your balance dip below the minimum at any point. In others, the bank will look at the balance at the end of each day or average your daily balances for the statement period.
If it’s an account you pull from frequently (like a checking account), you’ll need to pay close attention to your balance to avoid fees. You might want to set up an alert for any time you account dips below a certain amount.
2. Linking Your Accounts
Another possible strategy is to link multiple accounts you have at the same bank. In some cases, banks will look at your combined account balance (such as your checking and your savings account balance) to determine if you’ll owe a service or maintenance fee. This may or may not be an option where you bank, so again, you’ll want to look into the details of your account.
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3. Enrolling in Direct Deposit
You may be able to avoid minimum balance fees by signing up for direct deposit. This allows your employer to send your pay straight to your bank account, so you won’t need to deposit a paper check each payday. While the main benefit of direct deposit is the convenience, many banks provide added incentives to account holders who are paid this way, including monthly fee waivers.
Some banks will require you to receive a certain amount of money in direct deposits each month to dodge monthly fees. If so, you won’t want to distribute your income to more than one account. Rather than split your direct deposit between checking and savings, for example, you might have it all go to checking and then transfer some of that money into savings each month.
4. Using Your Debit Card More Often
Some banks will waive monthly maintenance fees for account holders who use a debit card linked to the account a certain number of times each month, often around 10 transactions. The reason is that whenever you swipe your debit card, the merchant pays your bank a transaction fee; these fees can make up for the loss of your monthly account fee.
5. Opting Into Paperless Statements
Some banks will waive monthly fees as long as you opt into e-statements. This means that instead of getting a paper statement in the mail every month, you’ll simply access it by logging into your account online (where you can view, download, or print your statements) or via your bank’s mobile app.
6. Hunting for a No-Fee Bank Account
One surefire way to get rid of minimum balance fees is to switch to a bank that doesn’t charge them. Online banks generally charge fewer fees because without brick-and-mortar branches to maintain, they have less overhead. In addition, they tend to offer higher annual percentage yields (APY), which makes it even easier to save each month.
If you’re in school, keep in mind that a number of banks offer no-fee checking accounts to college students. To open a student account, you typically need proof of student status (such as a college ID, an admittance letter, or a transcript).
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Opening a SoFi Checking or Savings Account
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
3 Great Benefits of Direct Deposit
- It’s Faster
- It’s Like Clockwork
- It’s Secure
As opposed to a physical check that can take time to clear, you don’t have to wait days to access a direct deposit. Usually, you can use the money the day it is sent. What’s more, you don’t have to remember to go to the bank or use your app to deposit your check.
Whether your check comes the first Wednesday of the month or every other Friday, if you sign up for direct deposit, you know when the money will hit your account. This is especially helpful for scheduling the payment of regular bills. No more guessing when you’ll have sufficient funds.
While checks can get lost in the mail — or even stolen, there is no chance of that happening with a direct deposit. Also, if it’s your paycheck, you won’t have to worry about your or your employer’s info ending up in the wrong hands.
FAQ
How do you avoid minimum balance fees?
Some banks, credit unions, and other financial institutions charge a monthly maintenance or service fee if your account balance dips below a certain amount. Some ways to avoid these fees include:
• Keeping your balance above the minimum balance requirement
• Opening up both a checking and savings account at the same institution
• Making a certain number of debit card transactions each month
• Setting up direct deposit
• Finding a bank with no minimum balance requirements
Why do banks charge minimum balance fees?
Banks charge minimum balance fees for several reasons. One is that it allows the bank to have more deposits, which in turn allows them to lend more money and maintain certain regulatory reserve requirements. Minimum balance fees also help banks cover the cost of maintaining your bank account, plus earn a profit.
What is the penalty for being under the minimum account balance?
Possible penalties for having less than the required minimum in your bank account include getting hit with a fee, receiving less (or no) interest for that statement period, and having your account closed.
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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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