Banks have changed the mandatory minimum savings account balance amount from time to time. A rise in the amount can be a cruel blow to many account holders in these tough times. There is a financial implication of the change as it would end up blocking a larger amount of funds for account holders. While this cannot be avoided fully, there is a manner to tackle it in order to ensure the least hit. Let's see how it can be done.
Quarterly average balance
The manner of maintaining a balance in the savings account has changed for several banks over the years. Earlier this used to be a minimum figure that has to be present in the account at all times. Now this has changed to a quarterly average figure. This term itself is confusing for a lot of people. In this system, instead of a minimum figure the balance has to be maintained on an average basis calculated over the entire quarter. This could mean a situation where a larger amount is maintained for a few days while on other days the figure can fall below the minimum amount to complete the requirement. If the balance falls below the minimum figure over the quarter then banks will levy the charges.
Rise in figure
A rise in the minimum balance amount will obviously require some more funds from an account holder. So, for example, if the minimum figure is raised to Rs 10,000 from Rs 5,000, then there will be a need to maintain the higher figure as an average. The first thing to see is whether the new and higher balance figure is applicable to your account or whether it is restricted to new accounts only. If a person is maintaining a higher balance than required in the account then there might not be much of a change that is required. So, for example, a person who maintains around Rs 20,000 at all times in his/her account will not be impacted by such a change, but in other cases there can be a smart way to tackle the situation.
Dealing with the situation
Consider, for example, a situation where the quarterly balance requirement is raised to Rs 10,000 from Rs 5,000. In this situation, an investor will need to ensure that over a 90-day period he/she should have a sum total of the amount in the account coming to Rs 10,000 x 90 = Rs 9,00,000. This means the investor can keep either Rs. 10,000 for all 90 days, or some more amount for less days but maintain the average so that he/she can avail a zero balance facility. For example, if the individual has some extra amount of, say, Rs 50,000 then he/she can keep this in the account for 18 days and for the remaining period maintain a zero balance in the account.
The situation would vary depending upon the exact amount available with the individual, but the overall idea remains the same. This is to ensure that for a short period of time the higher balance in the account is used for the purpose of completing the overall requirement for the quarter and after that the amount is freed up so there is no restriction on the use of the amount in the account. This will ensure that the worry of the minimum balance is also taken care of when the requirement is completed in this manner.
Again not everyone might be able to adopt this strategy but in these tough times it is essential to ensure that every rupee is put to the maximum use. This will ensure that there is a lower cost of conducting the entire exercise and making the best use of the available money. This is also the time when the real benefit is magnified because of the overall situation.
