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Don't stuck your money in bank accounts for maintaining min balance


Little Savings - Min Account Balance

When we have more than two bank accounts and maintaining min balance is a big headache. 

I have accounts in HDFC, SBI, SCB banks. 

Here is the list of min balances, I need to maintain in these accounts.

  • HDFC - 10,000 
  • SBI - 3,000 
  • SCB - No Min Balance as it is a Salary account. 

It sums up to an amount of 13,000 rupees. I used to maintain these min balances in each account and keeping idly my money for 30 days and also cannot be withdrawn for my expenses. Initially, I  thought, the idle money will be handy, if you have money shortage at month endings, and I can pay penalty for Non-maintenance of min balance of 300 rupees without depending on others.

But when I search for, how the banks calculate the AMB(Average 
Monthly Balance)?, I found a trick to avoid keeping the min balance amount for the whole month. 

How Average Monthly Balance will be calculated by banks?

Suppose, if your bank transactions are as follows

1st August - deposited 4,000 
14th August - Withdrawn 1,000 
28th August - Withdrawn 1,000 

 So, your AMB will be calculated as 3,333.33 (4,000*13 days + 3,000 *13 days + 2,000*2 days). 


If you deposit the "Total AMB amount" for one day, we can avoid maintaining the min balance amount for the rest of the days(literally for whole month).

AMB of bank * No of days in a month = Total AMB to be desposited for one day. 

Suppose if your MAB is 2,000, you can deposit 2,000*30 = 60,000 for one day and keep zero amount for the rest of the days. 
But practically, which is not possible for the HDFC banks, where I  need to maintain 3 lakhs for one day. So for my case, I keep 15,000 amount for 20 days in HDFC and another 6 days in SBI to save 15,000 rupees for the remaining 4 days, which can be spent for your expenses. The real catch is, if you have a huge amount in your hand you can save up to 24 days, where the money will be ready for your expenses from the 7th day of the month. 

Still Confusing? A detailed and practical explanation has been discussed here on how to maintain Min Balance for Multiple Accounts along with Calculator

Little Savings - Min Acc Balance(MAB)

At the end, I saved my 13,000 rupees from locking into bank accounts and now utilizing for the expenses.