What average monthly balance means and why banks track it
Average monthly balance is the sum of your account balance on each day of the month, divided by the number of days. Banks calculate this to decide whether you meet the minimum balance requirement for your account type, and sometimes to determine whether they charge you a monthly fee.
Think of it this way: if you have $1,000 in the account on day one and $500 on day two, your two-day average is $750. Banks do this for the full month because your balance changes constantly — deposits go in, checks clear, bills come out. A single snapshot on one day would not tell them much. The average smooths out those daily swings.
Some accounts require you to keep a minimum average monthly balance — often $500, $1,000, or $2,500 depending on the account type. If your average falls below that threshold, the bank charges a monthly maintenance fee, usually $10 to $15. Knowing how to calculate this yourself means you can predict whether you will owe that fee before the month ends.
Key Takeaways
- Average monthly balance is your total balance for each day of the month added together, then divided by the number of days in that month.
- Banks use this number to check whether you meet minimum balance requirements and to decide if they will charge you a monthly fee.
- You can calculate it yourself using your bank statements or by tracking daily balances in a spreadsheet.
- If your account requires a $1,000 minimum average balance and you fall short, you will typically see a fee of $10 to $15 on your next statement.
The step-by-step calculation
Start by gathering your bank statements for the month you want to calculate. You need the balance at the end of each day, or as close as you can get it. Most online banking platforms show you a transaction history that makes this easier — you can see the balance after each deposit or withdrawal.
Write down the balance for each day of the month. If you have 30 days in the month, you will have 30 numbers. If you have 31 days, you will have 31. Add all of those numbers together to get a total.
Divide that total by the number of days in the month. The result is your average monthly balance. For example: if the sum of all daily balances in a 30-day month is $24,000, your average is $24,000 ÷ 30 = $800.
If your account requires a $1,000 minimum average balance and you calculated $800, you have fallen $200 short. The bank will likely charge you a fee on your next statement.
Using your bank statement to find the number
Many banks now calculate average monthly balance for you and print it on your statement. Look for a section labeled "Account Summary," "Statement Summary," or "Account Analysis." The average monthly balance may be listed there directly.
If your bank shows this number, you do not need to calculate it yourself — you can trust their math. However, it is worth checking once to make sure you understand how they arrived at it, especially if you are close to the minimum threshold.
If your bank does not print the average monthly balance on your statement, you will need to calculate it yourself using the method above. Some banks only show this information in their online banking portal, not on paper statements. Log into your account and look under "Account Details" or "Statement Information."
Tracking daily balances in a spreadsheet
If you want to stay ahead of the minimum balance requirement, create a straightforward spreadsheet that tracks your balance each day. This takes about five minutes to set up and helps you see patterns in your spending.
Create three columns: Date, Transaction, and Balance. Each time you make a deposit or withdrawal, write it down and update the running balance. At the end of the month, copy all the balances into a fourth column, add them up, and divide by the number of days.
This method also shows you which days of the month your balance dips lowest. If you notice you always drop below the minimum in the middle of the month, you can plan ahead — move money in from savings a few days earlier, or time a paycheck deposit to land before that dip.
What happens if you fall short of the minimum
If your average monthly balance falls below the required minimum, the bank charges a monthly maintenance fee. This fee appears on your next statement and is deducted from your account automatically. The amount varies by bank and account type, but is typically $10 to $15.
Some banks waive the fee if you meet one of several conditions instead of the balance requirement. Common alternatives include: setting up direct deposit of your paycheck, making a certain number of debit card transactions per month, or maintaining a linked savings account with a minimum balance. Check your account agreement or call your bank to see what options are available to you.
If you are charged a fee and believe it was a mistake, contact your bank within 30 days. Banks sometimes reverse one fee as a courtesy, especially if you have been a customer for a while or if you were very close to the minimum.
How minimum balance requirements differ by account type
Not all checking accounts have the same minimum balance requirement. Basic or student checking accounts often have no minimum at all, or a very low one like $100. Premium accounts or accounts that offer higher interest rates may require $2,500 or more.
Some banks offer accounts with no monthly fee regardless of balance. These accounts may have fewer features — for example, they might limit the number of free transfers you can make per month — but they eliminate the risk of being charged for falling short.
If you are struggling to maintain a high average balance, it may be worth switching to a no-fee account. The trade-off is worth it if the alternative is paying $120 to $180 per year in maintenance fees.
Common mistakes when calculating average monthly balance
The most common mistake is using only the opening and closing balance for the month, then averaging those two numbers. This does not work because it ignores all the days in between when your balance was different. You must include every day of the month.
Another mistake is forgetting to count the correct number of days. February has 28 days in most years and 29 in leap years. Make sure you divide by the actual number of days in the month you are calculating, not always 30 or 31.
Some people also forget to include days when they made no transactions. If your balance stayed at $1,500 for five days straight, you still count all five days in your calculation. Each day gets its own line, whether something happened that day or not.
Frequently Asked Questions
Does my bank count weekends and holidays in the average?
Yes. Banks count every calendar day of the month, including weekends and holidays. If your balance was $1,000 on Saturday and $1,000 on Sunday, both days count toward your average. Transactions may not process on weekends, but the balance itself still exists and is included in the calculation.
What if I opened my account partway through the month?
Banks typically calculate the average using only the days your account was open. If you opened the account on the 15th of a 30-day month, they divide by 16 days, not 30. Check your account agreement or ask your bank how they handle this, because some banks may calculate differently.
Can I bring my average up by depositing money right before the statement closes?
Only if that money stays in the account for the rest of the month. A deposit on the last day of the month counts as one day's balance. If you withdraw it on the first day of the next month, it only helped your average for one day. To meaningfully raise your average, money needs to stay in the account for multiple days.
Is average monthly balance the same as my account balance?
No. Your account balance is what you have right now. Your average monthly balance is a calculation of what you had each day over the past month. You might have $2,000 in the account today but an average monthly balance of $800 if you spent most of the month with less money in it.
Do I need to calculate this myself if my bank shows it on my statement?
You do not have to, but it is useful to check once. Calculating it yourself helps you understand how close you are to the minimum and whether you are at risk of a fee next month. After you have verified the bank's number once, you can rely on their calculation going forward.