Average monthly balance is the total of your account balance on specific days each month, divided by the number of days the bank measures

Your bank calculates average monthly balance by adding up your account balance on certain dates—usually the last day of each week, or the last day of each day, depending on the bank's method—then dividing by how many measurement points there were. If your bank checks your balance on the last day of each week and you had $1,000, $1,200, $900, and $1,100 on those four dates, your average would be $1,050.

Banks use this number to decide whether you pay a monthly fee, earn interest, or may have access to for perks like fee waivers or higher interest rates. Some accounts waive the monthly fee if your average balance stays above a set threshold—often $500 to $2,500 depending on the account type. Others use it to calculate how much interest you earn on savings accounts or money market accounts.

The exact dates your bank measures and the exact threshold that triggers fees or benefits vary by institution and account type. You can find your bank's method in your account agreement or by calling customer service and asking how they calculate it.

Key Takeaways

  • Average monthly balance is calculated by adding your balance on specific dates throughout the month and dividing by the number of dates measured.
  • Banks use this figure to determine whether you owe a monthly maintenance fee or whether that fee is waived.
  • The threshold that waives fees or unlocks benefits varies by bank and account type, typically ranging from $500 to $2,500.
  • You can find your bank's exact calculation method in your account agreement or by contacting them directly.
  • Dipping below the threshold for even one measurement period can trigger a fee, so knowing your bank's measurement dates helps you plan.

How different banks measure the balance

Not all banks measure average monthly balance the same way. Some check your balance once per day and average all 30 or 31 days. Others check only on the last business day of each week. A few check on the first and last day of the month only. The method matters because a balance that dips for just a few days might not show up in a weekly measurement but would lower a daily average.

Chase, for example, uses daily balance for many of its accounts. Bank of America also uses daily balance for most checking accounts. Wells Fargo uses daily balance for some accounts and statement period average for others. Credit unions vary widely—some use daily, some use weekly, and some use the balance on the last day of the month only.

Your account agreement lists the exact method. If you cannot find it, call your bank's customer service line and ask: "How do you calculate average monthly balance for my account?" They will tell you the specific dates or frequency.

When your bank uses average monthly balance to waive fees

Most checking accounts charge a monthly maintenance fee unless you meet one of several conditions. Maintaining a minimum average monthly balance is one of the most common ways to avoid that fee. If your account requires a $1,500 average monthly balance to waive the $12 monthly fee, you need your balance to average $1,500 across all the measurement dates in that month.

Some banks offer tiered benefits: keep $500 and the fee is waived; keep $2,500 and you also get unlimited ATM fee reimbursement; keep $10,000 and you unlock higher interest rates or other perks. Each tier is based on the average monthly balance, not the balance on any single day.

If you fall short of the threshold even once, the fee typically posts to your account within a few days of the month ending. Some banks offer a grace period—usually one or two days—but most do not. Knowing your bank's measurement dates lets you plan deposits or transfers to stay above the threshold.

How average monthly balance affects interest earned

Savings accounts and money market accounts often calculate interest based on your average monthly balance. The bank multiplies your average balance by the annual percentage yield (APY) and divides by 12 to get the interest for that month. A higher average balance means more interest earned.

For example, if your savings account earns 4.5% APY and your average monthly balance is $5,000, you would earn roughly $18.75 in interest that month ($5,000 × 0.045 ÷ 12). If your average balance drops to $2,500, you earn about $9.38. The difference compounds over time, so maintaining a higher balance directly increases your earnings.

Some high-yield savings accounts do not use average balance at all—they calculate interest based on your balance at the end of each day. These accounts often offer higher rates and may be better if your balance fluctuates. Check your account agreement to see which method your bank uses.

What happens if your balance drops below the threshold

If your average monthly balance falls below the threshold required to waive fees or unlock benefits, the consequence is usually a monthly maintenance fee. This fee is not a penalty for a single low-balance day; it is the result of your average across the entire month being too low. The fee typically ranges from $5 to $15 for basic checking accounts, though premium accounts may charge more.

Some banks offer one or two free passes per year if you fall short, but most do not. Once the fee posts, you can call and ask for a reversal if you have been a long-standing customer with a good history, but the bank is not required to remove it. Prevention is simpler than asking for forgiveness.

If you consistently struggle to maintain the threshold, switching to an account with a lower requirement or no requirement at all may save you money. Many online banks and credit unions offer checking accounts with no monthly fee regardless of balance.

How to find your current average monthly balance

Your bank statement usually shows your average monthly balance for the statement period. Look for a line item labeled "Average Daily Balance," "Average Monthly Balance," or similar language. It appears near the top or bottom of the statement, often alongside interest earned or fees charged.

If you bank online, log into your account and look for a statement summary or account details section. Most banks display the average balance there. If you cannot find it on your statement or online, call customer service and ask them to tell you your average balance for the current month. They can also tell you whether you are on track to meet the threshold by month's end.

Checking this number once a month takes two minutes and helps you avoid surprise fees. If you see the average is trending below the threshold, you can make a deposit or transfer to bring it back up before the month closes.

Strategies to maintain your average monthly balance

If your account requires a minimum average monthly balance, the simplest strategy is to keep that amount in the account at all times. If the threshold is $1,500, maintain at least $1,500 every day and you will never fall short. This works if you have the money available and do not need it elsewhere.

If you cannot keep that much in one place, some people use a different strategy: make a large deposit near the end of the month to boost the average. If you measure on the last day of each week, a deposit on day 25 or 26 will count toward that week's balance and can pull your average up. This is legal and common, though it requires planning and discipline.

Another option is to move money between accounts strategically. If you have a savings account with a higher balance, you can transfer money into your checking account a few days before the measurement date, then move it back after. This works only if your bank measures on specific dates rather than daily.

The easiest long-term solution, if you cannot maintain the threshold, is to switch to an account with no minimum balance requirement. Many banks offer free checking with no strings attached, and you lose nothing by moving.

Frequently Asked Questions

Does one day with a low balance ruin my average for the month?

Not necessarily. If your bank measures daily, one low day does affect your average slightly, but it is only one data point among 30 or 31. If your bank measures weekly, a low day that falls between measurement dates may not show up at all. Check your bank's measurement method to know how much a single low day matters.

Can I move money between my own accounts to boost my average balance?

Yes, as long as the money is genuinely yours. Moving $5,000 from your savings account to your checking account on the measurement date, then moving it back the next day, is legal. Your bank may flag unusual patterns, but the practice itself is not against the rules. Just make sure you have the money available to move.

What if my bank measures daily but I only have money some days of the month?

Your average will be lower than if you had the money every day, and you may not meet the threshold. If this is a regular pattern, switching to an account with no minimum balance requirement or a lower threshold is usually the better choice than trying to game the system.

Does my average monthly balance affect my credit score?

No. Your bank balance is not reported to credit bureaus and does not affect your credit score. Average monthly balance only matters for fee waivers, interest calculations, and account perks within that specific bank.

If I get charged a fee for low average balance, can I get it removed?

You can ask, especially if you have been a customer for a long time or if the fee was a one-time mistake. Banks sometimes reverse one fee as a courtesy. However, they are not required to, and repeated requests may not work. Your best option is to prevent the fee by maintaining the threshold or switching accounts.