What is a Monthly Average Balance

There are two types of Bank Accounts with respect to the amount of money an Account Holder needs to maintain: those that need minimum monthly balance to be maintained and those that do not.

Most people think of this minimum balance requirement as a way for Banks to lock their funds or earn more from them but this is not the case. This blog will help you understand what Monthly Average Balance is and why it matters.

Monthly Average Balance refers to the average closing balance maintained in a Bank Account over the course of a month. It is calculated by adding up the closing balance of each day of the month and then dividing the total by the number of days in that month.

For instance, if the Monthly Average Balance requirement is Rs 10,000 then it does not mean that you need to have Rs 10,000 each day in your Account.

Why is it important to maintain a Monthly Average Balance?

Maintaining a Monthly Average Balance in your Account is important as it helps your Bank manage funds and provide various services and rewards free of cost to the customers.

Bank will also use the funds deposited by you to extend credit to others or invest in financial instruments like Mutual Funds and other securities. Monthly Average Balance brings stability to your Bank and the economy thus keeping your investments safe.

Is It Better To Go for Accounts with Monthly Average Balance Requirement or Not?

Accounts that have a minimum balance requirement will offer more benefits such as free ATM transactions, cashbacks, rewards, overdraft facilities and much more as compared to the Accounts that do not have this requirement. Apart from these benefits you need to understand all Account-related charges because if minimum required amount is not maintained monthly a penalty can be imposed.

How to calculate Monthly Average Balance using the calculator on ICICI Bank page

Use our Monthly Average Balance Calculator to calculate your Monthly Average Balance:

Open iMobile Pay App or go to ICICI Bank website and login to your Account
Go to 'Account Details' section and click on the 'Monthly Average Balance Calculator' tab
Enter the balance that needs to be maintained along with the month and the year
Select the number of days, enter the average end-of-day balance and click on “Calculate”
The calculator will display your Monthly Average Balance.

Different Accounts have different Monthly Average Balance requirements. There are some Accounts that need a Monthly Average Balance starting from Rs 2,500 (Campus Stars) and can go up to Rs 1,25,000 (Privilege Banking for Non-Senior Citizens).

There are more than 40 variants across Savings, Salary and Current Accounts catering to all kinds of requirements. All the Salary Accounts and certain Savings Accounts of ICICI Bank do not require Monthly Average Balance.

Some Tips on Monthly Average Balance:

Penalty charges: If Monthly Average Balance is not maintained in your Account then penalty charges can be imposed. This can vary depending on the Bank and the type of Account. One needs to be clear with the Terms and Conditions to understand the charges imposed.
Importance of Credit Score: Maintaining a good Credit Score is beneficial for availing Loans and Credit Cards as it can reflect positively on your finances and track record.
Benefits for senior citizens: For senior citizens there are benefits like- free ATM transactions, rewards and much more.

Ways to ensure your Account has the required Monthly Average Balance

In case you are struggling to maintain the Monthly Average Balance, here is what you can do:

Keep track of your expenses: Prepare a budget and maintain a record of the amount you spend as this will help you identify unnecessary expenses and save more.
Opt for automatic transfers: Many Banks offer the option of automatic transfers to help Account holders maintain their Monthly Average Balance. You can set this up by linking your Salary Account to your Savings Account.
Choose the right Account: As per your needs and finances decide whether an Account with a lower Monthly Average Balance requirement is suitable or one with a higher MAB then check the benefits and take a call.
Avoid penalties: If you fail to maintain the monthly requirement try replenishing your Account balance as soon as possible to avoid further charges
Link multiple Accounts: If you have multiple Accounts in the same Bank mapped to a single Family ID then you can link them to meet the Monthly Average Balance requirement.

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