Maintaining a minimum balance in your bank account not only protects you from penalties, but also provides free banking facilities, insurance cover, easy loan approval, and a better CIBIL profile. So, know its 5 major benefits.
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Maintaining a minimum balance in your bank account not only protects you from penalties, but also provides free banking facilities, insurance cover, easy loan approval, and a better CIBIL profile. So, know its 5 major benefits.
If you have a savings account with any bank, you’ve likely heard of the term “Average Monthly Balance” (AMB). While many banks have now eliminated the hassle of minimum balance requirements for customers, some banks still adhere to this practice. This is why, when we receive a message from our bank telling us that our balance is low and we should deposit money, we often get angry. We assume the bank is just looking for an excuse to fine us. But have you ever considered the benefits of maintaining a certain amount in your bank account?
Yes, an average monthly balance isn’t just a necessity; it can be a part of smart banking. If you maintain it properly, banks offer you benefits that others pay hefty fees for. So, let’s explore the amazing benefits of maintaining an AMB that will make your life easier.
1. Eliminate penalties and hefty fines.
The first and most direct benefit is that your hard-earned money isn’t lost in penalties. Nowadays, different banks charge a penalty ranging from ₹200 to ₹600 if your balance falls short.
Smart Tip: Yes, if you maintain an AMB, you can save ₹2,000 to ₹5,000 a year just by avoiding penalties. You can invest this money later.
2. Enjoying Free Checkbooks and ATM Transactions
Many banks often offer extra perks to their loyal customers. If your account balance is adequate, you can:
ATM Transactions: The bank may increase the monthly limit of free ATM transactions.
Checkbooks: Many banks offer one or two free checkbooks per year. However, if the balance is low, you may have to pay for each page.
DDs and Pay Orders: Banks can often offer significant discounts on demand draft charges.
3. Getting ‘Free’ Insurance
This is a benefit that is often overlooked. Some banks offer complimentary personal accident insurance and air accident cover to customers who maintain a balance of a certain limit (such as ₹25,000 or ₹50,000).
Benefits: You don’t have to pay a separate premium for this. Simply deposit the funds in your account and the bank can provide you with insurance cover for free.
4. Getting a loan and credit card is easier
Yes, when you apply for a home loan, car loan, or personal loan from a bank, the bank also considers your repayment capacity.
Bank confidence: If you consistently maintain a good balance (AMB) in your account, the bank often believes you are financially strong and can repay the money on time.
Pre-approved offers: Banks can offer pre-approved credit cards and instant loans to customers with good balances, without any documentation.
5. Premium Banking and Relationship Manager Features
By the way, if you maintain an average balance of ₹1 lakh or more in your account, the bank may classify you as a “premium customer.”
No waiting: This saves you from waiting in line at the bank and provides you with priority service.
Relationship Manager: The bank assigns you a personal manager who can handle all your banking needs over the phone.
Airport Lounge Access: Many debit cards, which are available upon maintaining a balance, also offer free airport lounge access.
How is AMB calculated?
We often make mistakes here. The average monthly balance doesn’t necessarily mean that your account must have that amount every day.
Example: Suppose your AMB is ₹10,000. So, if you keep around ₹20,000 in your account for the first 15 days of the month and a zero balance for the next 15 days, your average will still be considered around ₹10,000. This means you can withdraw and deposit money as needed, as long as the monthly average is correct.
Maintaining a balance is not a loss, it’s an investment.
Keeping a minimum balance in your bank account isn’t just a bank rule, it’s also good for your own financial health. This not only helps you avoid unnecessary expenses but also enhances your reputation with the bank. The next time you receive a balance maintenance message, consider it an opportunity to maintain your benefits, not a threat of penalties. (Note: This news is based on general information only; contact your bank for more details.)
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