What is Average Monthly Balance (AMB) and how to calculate (2024)

Summary: A savings accountholder needs to maintain their account’s AMB to avoid facing non-maintenance charges. Know brief guide to AMB & it's calculation. Read more.

02 Dec 2022 by Team FinFIRST

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 yoursavings accountevery month. A maintenance charge is levied if the account’s average monthly balance is not maintained. The amount is computed at the end of each month.

What is average monthly balance?

From the 1^st day till the end of every month, we make a note of the end-of-day balance in your savings account for each day. Then we sum them up and divide by the number of days in the month. That’s it.

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How is the monthly average balance determined?

Most banks, including IDFC FIRST Bank, calculateAMBusing the end-of-the-day/daily closing balances in savings accounts, which are summed up over a given month to determine the monthly average balance. The closing day balances for a 31-day month are totalled, and the sum is divided by 31 to get the average.

To fulfil AMB requirements, you must keep sufficient amount in your account because if the the AMB is not maintained, banks can levy certain charges.

Here is an easy formula to calculate AMB:

AMB = The sum of each day’s closing balance / Number of days in the month

The fine for not being able to maintain a savings account’s minimum average balance differs from bank to bank. TheAMB chargesfor not keeping your MABare influenced by the area you reside, the type of savings account you have, and the bank you have an account with.

Some banks calculate these charges based on how you fall short of the requirement.As a rule, the farther it is away from meeting the requirements, the greater the chances of paying maintenance charges. You can choose banks with minimal charges such as IDFC FIRST Bank and open bank account online today.

Guidelines to maintain a healthy average monthly balance

It is not difficult to maintain the AMB in your savings account. All you need to do is to keep the following points in mind:

• Avoid creating too many accountsBy managing only one Savings Account, you only have to focus on a single account’s AMB requirements. Keeping track of many accounts will not bother you with this method. Instead of complying with AMB rules in all accounts, you can access your fund easily with a single account.
• Make deposits in lumpsumHere’s an effective way of keeping your AMB in check -If the AMB of your account is set at ₹5,000, you can keep your closing day balance at ₹20,000 for about8 days to help boost the account’s average balance.

  Account holders can keep these effective tips in mind to maintain the average monthly balance of their accounts. Do keep in mind that you can also take the help of monthly average balance calculators, which are online tools that can be used for free.Also it is best to keep track of all your account information with a mobile banking app

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circ*mstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.