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What Is A Minimum Balance
What is a Minimum Balance? When you bank with a bank it is going to require you to maintain a minimum balance so that the interest that it earns from that balance offsets the basic services it provides for you. When you don’t, you will be charged a fee for not maintaining the balance, which goes towards their services. Only current account holders are exempted from maintaining this minimum. Of course, with this economic downturn lot of things are changing and so some banks are now waiving this minimum required balance. One prominent bank has announced just 2 days back that it is doing away with this minimum required balance across the board that is for all its customers, whatever type of account they may hold.
The FCAC, Financial Consumer Agency of Canada has been vigorously picketing the banks for doing away with this minimum required balance. however most of the major banks in Canada, like the RBC, Scotia, CIBC, HSBC, BMO all require a minimum balance, where service charges are waived. Else a service charge is levied every quarter or monthly in some cases. The advantages to a no-minimum-required-checking account are: i) no monthly balance required nor any fees charged ii) free checkbooks iii) unlimited free banking services iv) free issue of ATM cards and usage thereof v) free net banking facility activated.
The catch is these accounts can collect no reward points that maybe redeemable at various merchant establishments. The accounts which require you to maintain a minimum balance carry some extra advantages like: i) no fees for banking services ii) free 30 transactions per month iii) free services for young adults, students, senior citizens, etc. iv) minimum balance to be maintained differs from bank to bank, and reflect in the number of free transactions allowed. Everyone has to decide for himself whether maintaining the minimum balance makes sense or paying the service charges is better.
For example, when you can you get a cost savings you should consider your opportunity cost, if you are going to forego that savings. You have to decide if keeping this money in a bank at low interest, you forego other uses for that money, and so if it is worth wile to you. For example, that money could be used to repay a loan rather than to save the nominal monthly service fees.
So depending on what alternate uses you have planed for the money should decide in whether you are going to maintain the minimum balance or use the money for something else. for instance, investing in some low grade returns bonds like GIC would not make sense as the money you save on service charges are likely to be higher than the returns you may get.
Depending on the CIBC services you would like from your banker and the extra perks and advantages you are looking for, you have to make a decision on whether to maintain the required minimum balance or not. depending on the type of account you hold with the bank, the service charges can be anywhere from upwards of $3.00 per month. So take into consideration all the pros and cons and decide. What is a Minimum Balance?
The FCAC, Financial Consumer Agency of Canada has been vigorously picketing the banks for doing away with this minimum required balance. however most of the major banks in Canada, like the RBC, Scotia, CIBC, HSBC, BMO all require a minimum balance, where service charges are waived. Else a service charge is levied every quarter or monthly in some cases. The advantages to a no-minimum-required-checking account are: i) no monthly balance required nor any fees charged ii) free checkbooks iii) unlimited free banking services iv) free issue of ATM cards and usage thereof v) free net banking facility activated.
The catch is these accounts can collect no reward points that maybe redeemable at various merchant establishments. The accounts which require you to maintain a minimum balance carry some extra advantages like: i) no fees for banking services ii) free 30 transactions per month iii) free services for young adults, students, senior citizens, etc. iv) minimum balance to be maintained differs from bank to bank, and reflect in the number of free transactions allowed. Everyone has to decide for himself whether maintaining the minimum balance makes sense or paying the service charges is better.
For example, when you can you get a cost savings you should consider your opportunity cost, if you are going to forego that savings. You have to decide if keeping this money in a bank at low interest, you forego other uses for that money, and so if it is worth wile to you. For example, that money could be used to repay a loan rather than to save the nominal monthly service fees.
So depending on what alternate uses you have planed for the money should decide in whether you are going to maintain the minimum balance or use the money for something else. for instance, investing in some low grade returns bonds like GIC would not make sense as the money you save on service charges are likely to be higher than the returns you may get.
Depending on the CIBC services you would like from your banker and the extra perks and advantages you are looking for, you have to make a decision on whether to maintain the required minimum balance or not. depending on the type of account you hold with the bank, the service charges can be anywhere from upwards of $3.00 per month. So take into consideration all the pros and cons and decide. What is a Minimum Balance?
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