How to keep the balance of Rs 7,847 on average

Maintaining a monthly average balance MAB can be an uphill task for those with multiple savings accounts and living on a thin budget. The minimum amount you can keep in your savings account is the monthly average balance. Most people think that the average monthly balance is the average daily balance we must maintain.

The closing balance in your account is divided by the total number of days in the month. The minimum average balance is calculated by adding up the closing balance in your account every day. If your balance is below the threshold for the most part of the month, you can avoid a penalty by keeping a higher amount for the rest of the month.

Assume your bank requires you to maintain an average minimum balance of Rs 5,000. For the month of August, you have the following closing balances: From August 1 to 5 the closing balance for 5 days was Rs 2,000. From August 6 to 10 for 5 days it was Rs 3,000, from August 11 to 15, for 5 days it was Rs 5,000 and from August 16 to 18 for 3 days it was Rs 1,000. You had a closing balance of 53,000 for the total of 18 days. The monthly average balance for the first 18 days maintained a MAB of Rs 2,944 53,000 18 Given that it is below the Rs 5,000 threshold set by the bank, you need to increase the balance in the final 13 days of the month. The amount you need to maintain is 31 x 5000 -- 53,000 13 It is equal to Rs 7,847. By keeping the daily balance of Rs 7,847 on average for the remaining part of the month, you can meet your monthly average balance requirement and save from paying high penalties.

In case you don't want to block this amount for the whole month, there is a clever way of doing this. You need to keep Rs 1,02, 000 for just one day. You can bring your balance even below zero if you have already fulfilled the requirements levels.