A minimum balance is the smallest amount of money you must keep in a bank account to avoid fees or maintain account privileges. Falling below this balance may trigger monthly charges or the loss of perks.
How It Works
Banks set minimum balance requirements for certain chequing or savings accounts. For example, if the minimum balance is $2,000, you must keep at least that much in the account at all times to avoid fees.
Why Banks Require It
- Reduces risk: Ensures the bank has stable deposits on hand.
- Encourages higher balances: Helps banks use customer deposits for lending or investment.
Final Thoughts
Meeting minimum balance requirements is an easy way to avoid bank fees. However, it can tie up funds that could otherwise be used for savings or investments.