What is the minimum balance fee?

The concept of a minimum balance fee is a common practice among financial institutions, particularly banks. It serves as a penalty or surcharge imposed on account holders whose account balances fall short of a predetermined threshold.

The purpose behind this fee is to incentivize customers to maintain a minimum level of funds in their accounts, which helps banks manage their liquidity and operational costs more efficiently.

The specific amount required to avoid the fee varies from bank to bank and can depend on factors such as the account type and the services offered. In some cases, the minimum balance might be as low as a few hundred dollars, while in others, it could be several thousand.

If a customer's account balance falls below the stipulated minimum, they will be charged the minimum balance fee, regardless of whether they have made any transactions or incurred any other fees during the billing cycle.

For instance, if the minimum balance required in a checking account is $500, and the customer's balance dips to $450, they will be liable to pay the minimum balance fee. The fee amount can also vary, depending on the bank's policies.