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A savings accountholder needs to maintain their account’s monthly average balance to avoid facing non maintenance charges
According to banking terminologies, average monthly balance or AMB is the average amount that you must keep in your savings account every month. Understanding the meaning of AMB and its working is crucial for account holders, as it determines whether they will incur maintenance charges or not and qualify for certain benefits. If the account’s average monthly balance is not maintained, a maintenance charge is levied by the bank based on its internal policies.. The AMB amount is computed at the end of each month.
Maintaining a set monthly average balance ensures your account remains in good standing and qualifies for specific benefits associated with your savings account type. A consistent AMB may also offer the following advantages:
To fulfil AMB requirements, you must keep sufficient amount in your account because if the AMB is not maintained, banks can levy certain charges.
The decision between accounts with or without an AMB requirement depends on your financial standing and how you manage funds.
Understanding AMB calculation is essential to ensure you stay within the required balance range. Here’s a step-by-step breakdown:
Monthly Average Balance=Total Daily Balances of the Month/Number of Days in the Month
This calculation will give you the AMB, which should meet the minimum limit set by the bank to avoid charges.
Imagine it’s a 30-day month, and your balance varied as follows:
Here’s the calculation:
40,000×15=6,00,000
60,000×15=9,00,000
6,00,000+9,00,000=15,00,000
AMB=15,00,000/30=50,000
Maintaining the required average monthly balance is a simple yet effective way to optimise your account benefits while avoiding penalties. Consider whether an AMB account aligns with your financial habits and choose a structure that best supports your goals. Making use of these tips can help you maintain the average monthly balance of your accounts conveniently. Also, it is best to keep track of all your account information with a mobile banking app.
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