The explosion of fintech companies that introduce banklike offerings has created heavy competition in the banking market. Competition is already impacting one of the barriers to opening bank accounts — the requirement to maintain minimum balances. The traditional savings account typical minimum balances vary considerably, as does the return paid as measured by annual percentage yield (APY). Partnering with a bank that meets your needs and pays interest will help you achieve your savings goals faster.
How Minimum Account Balances Work
A minimum account balance is the smallest amount of money you must have in your bank account to avoid fees or earn benefits. Traditional banks typically set minimum balance requirements for savings and checking accounts. If the balance drops below the minimum amount, you may incur fees or lose your interest earnings.
If you have a minimum balance requirement, you must ensure your account balance meets or exceeds the minimum throughout the agreed period. If your balance drops below the minimum, you may face increased bank charges or lost interest earnings. If you battle to maintain your minimum balance, consider choosing an account with a lower minimum balance requirement.
Minimum balance requirements vary between banks and account types. You must understand your bank’s terms, conditions and fee structure. A traditional savings account typical minimum balance ranges from zero to $25,000. Often, online savings accounts have a minimum balance of zero.
The traditional savings account typical balance is calculated in one of three ways:
Calculating the minimum balance:
- Daily balance: The lowest balance your account reaches each day over the period
- Monthly average balance: The average of your account's balance each day of the month
- Minimum combined balance: The total sum is calculated over a group of agreed accounts
Why Do Banks Impose Minimum Balances on Savings Accounts?
Banks ask for the minimum balances for several reasons. These include:
- Cost recovery: Banks must recover enough income from customer accounts to cover operational costs.
- Profitability: When customers keep money in their accounts, these funds are available for the bank to lend to others. The bank earns interest on funds loaned to others.
- Dormant account deterrent: Inactive accounts cost money to maintain but earn little to no income for the bank. Minimum balances will discourage customers from opening accounts they don’t plan to use.
- Differentiation: Some banks segment their customers based on minimum balance requirements. They may offer better features or higher minimum balances.
Banks penalize account holders who breach the minimum balance requirements. The consequences depend on the bank and type of account. You may incur service fees, transaction costs or loss of interest. The bank may restrict your activity like the number of checking account transactions.
Minimum Balances for Basic Savings Accounts
The chart below shows the vast difference in the APY that various basic savings accounts offer.
| Bank | Minimum | APY |
| Axos Bank | $0 | 0.25% |
| SoFi | $0 | 4.6% |
| Quontic | $100 | 4.5% |
| Wells Fargo | $25 | 0.01% |
| Chase | $25 | 0.01% |
| Bank of America | $100 | 0.01% |
| U.S. Bank | $25 | 0.01% |
| Discover Bank | $0 | 4.3% |
Minimum Balances for High-Interest Savings Accounts
The best high-yield savings accounts pay considerably more interest than the average savings account.
| Bank | Minimum | APY |
| Quontic | $500 | 5.25% |
| TotalDirectBank | $2,500 | 5.26% |
| North American Savings Bank | No minimum | 5.24% |
| Ivy Bank | $2,500 | 5.3% |
| My Bank Direct | $500 | 5.35% |
| UFB Direct | $0 | 5.25% |
| Alto | $0 | 5.1% |
Minimum Balances for Online Savings Accounts
The chart below shows the best online banking accounts with minimum balances and APYs.
| Bank | Minimum | APY |
| Barclays | No minimum | 4.35% |
| American Express Savings | $1 | 4.35% |
| Discover | $0 | 4.3 |
| SoFi | $0 | 4.6% |
| U.S. Bank | $25,000 | 4.5% |
Online banking is safe and convenient and pays high interest rates, often requiring no minimum balance.
How to Avoid Minimum Balances
There are several ways in which you can avoid minimum balances. These include:
Choose an account with no minimum balance: All banks don’t insist on minimum balances. Do your research and find a bank with terms and conditions that suit you. Some banks even give new account holders sign-up bonuses.
- Maintain a combined minimum: If, according to your agreement, you can maintain the balance across accounts, do so.
- Have your salary paid into the account: Many banks will waive minimum balances if you have regular direct debits flowing into the account.
- Track your bank balance: Ensure you know your account balance and take action to rectify shortfalls. Many online accounts offer a balance-tracking service.
- Consider alternatives: Open a credit or debit card for regular transactions. It may be easier to track your savings by reducing the number of savings.
- Automatic transfers: Set up automatic transfers from another account.
Choose the Bank Account that Meets Your Financial Needs
Your personal financial decisions should meet your financial needs. The financial markets offer many varied products with terms, conditions and fee structures to meet the needs of modern account holders. Research and find the banking product that meets your lifestyle needs and financial aspirations. This is a sure way to make the best of your income, pay the lowest fees and earn competitive returns.
Frequently Asked Questions
Is there a minimum balance for a savings account?
Most savings accounts have minimum balance requirements. This requirement helps to cover the bank’s operational costs.
What is the minimum balance for a traditional bank?
Most banks want their clients to hold minimum balances in their accounts. The amount required differs from one bank to another. You must read the terms and conditions to understand your bank’s requirements.
Can you add to the balance regularly for a traditional savings account?
The purpose of a traditional savings account is to allow you to save toward your financial goals. You can add to your savings account at any time you please.
About Anna Yen
Anna Yen, CFA is a personal finance writer with over two decades of professional finance and writing experience in roles within JPMorgan and UBS derivatives, asset management, crypto, and Family Money Map. She specializes in writing about personal finance topics ranging from investments, budgeting, debt management, credit, student loans, insurance, and retirement planning to real estate and cryptocurrencies. Her work has been published on sites like Quicken, the crypto exchange Bybit, and Credit.com.