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Why do banks have minimum maintaining balance on savings account?

You might think that "Why do banks have minimum maintaining balance on savings account? It's better that banks should remove penalties or charges if an accountholder falls below the maintaining balance". Yes, it's seems better that charges or penalties be removed when you fall below the bank's required maintaining balance. But didn't you know that accountholders could end up paying more when banks impose "no penalty to accounts falling below maintaining balance"? Why do banks actually charge or penalize those who fall below the maintaining balance?

Why banks have no maintaining balance?

But first, remember that it's free to open or apply an account in the bank. No charges for new account application. No charges when you withdraw or deposit on your branch of account. No charges when you withdraw to an ATM machine of your branch of account. And yet banks are still paying for the cost of those banking services. Have you ever wondered how they manage the cost for just opening a new account application? Banks spend money to pay for employees, buy banking materials (atm card, passbook, atm machines, devices or money counter devices, etc.

Banks need those maintaining balance to pay for banking costs/expenses:
  • cost of day to day operations,
  • cost of atm cards, 
  • cost of passbooks,
  • cost of receipts/slips,
  • cost of computer maintenance,
  • cost of printer inks, 
  • cost of time rendered in serving the client,
  • cost of atm machines and its maintenance (think of how many people uses the atm machine of a particular bank everyday)
  • cost of electricity and water of the bank
  • and other banking costs
And yes, think of the free cost of keeping your money safe in the bank. Think of the everyday banking transactions which are mostly free. Where do banks get money for paying their costs? Obviously, one of their so called income is the required maintaining balance of its customers.

If the government stops the banks from imposing penalties on accounts falling below maintaining balance, banks will be forced to impose charges on certain banking transactions such as charges for every atm withdrawal, or charges for every deposit transaction.

Do you like it to happen that everytime you open a new account or withdraw and deposit (atm or over-the-counter), the bank will charge a cost for it?
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