A minimum deposit is the smallest amount of money you need to open an account with a bank, credit union, or other financial institution. It can also refer to the minimum amount you must keep in your account each month to lock in certain account benefits.
Let’s take a closer look at what a minimum deposit is and how it works, so you’re well-prepared the next time you open a new account.
Definition and Example of a Minimum Deposit
A minimum deposit is the amount of money you’re required to deposit to open an account or take advantage of certain benefits. When you open an account at a bank or credit union, you’ll likely come across a minimum deposit requirement.
Let’s say you decide to open a new savings account at ABC Bank. The bank requests that you deposit $25 into the account. You transfer the $25 into your new account at ABC Bank from another account you have at a different financial institution. ABC Bank might also ask you to keep at least $100 in the account each month if you want to qualify for its best interest rate. As a result, you keep tabs on your account and make sure you always have $100 in it at a minimum.
How a Minimum Deposit Works
To understand how a minimum deposit works, let’s take a closer look at two common types of minimum deposits.
Minimum Opening Deposit
A minimum opening deposit is the amount of money you’ll need to deposit to open an account such as a checking or savings account. While this figure varies, most financial institutions require minimum opening deposits ranging from $25 to $100.
Note
To make a minimum opening deposit, you can transfer money from a different financial institution or from another account at the same institution. You might also be able to use a check, money order, or debit card.
Most banks and credit unions require you to provide your deposit when you apply for your account. You can deposit more than the minimum. Some financial institutions or accounts don’t have minimum opening deposits.
Minimum Monthly Deposit
Some banks or credit unions require you to make a minimum monthly deposit to enjoy certain account benefits. For example, a bank might state that as long as you meet its minimum monthly deposit threshold, you can avoid fees. By meeting a monthly minimum deposit, you may also get a higher interest rate on a savings account.
Note
The “minimum balance” requirement is another common term you might come across when you open a new account. It requires you keep a certain amount of money in your account. For example, at Wells Fargo, you’re charged a $10 monthly service fee for its Everyday Checking account, but you can get that fee waived by maintaining a $500 minimum balance.
How To Open a New Account
If you’d like to open a new checking, savings, CD, or other account, make sure you shop around, find the right financial institution for your situation, and understand its minimum deposit requirements. Then follow these common steps.
- Choose the right account: Most financial institutions offer a variety of accounts. Explore your options and figure out which one you’d like to open.
- Gather documents: In most cases, you’ll need to provide two forms of government ID. This can be a driver’s license and passport. In addition, you might be asked to provide proof of address, such as with a utility bill.
- Confirm eligibility: Banks and credit unions have their own unique eligibility requirements. For example, with some, you must be at least 18 years old to open a checking account. Make sure you meet your financial institution’s criteria.
- Fill out the application: Depending on the bank or credit union, you can fill out an application online or in person. Provide accurate information and double-check your work.
- Deposit a minimum: If there is a minimum opening deposit, place the funds into your new account. In the event there’s a minimum monthly deposit or minimum balance, make sure you meet it at all times.
Key Takeaways
- A minimum deposit is the amount of money you need to open an account or take advantage of perks such as no fees or higher interest rates.
- The most common types of minimum deposits are minimum opening deposits and minimum monthly deposits.
- If you don’t meet or maintain minimum deposit requirements, your financial institution might impose consequences.
FAQs
What Is a Minimum Deposit? A minimum deposit or initial deposit is the minimum amount of money required to open an account with a financial institution, such as a bank or brokerage firm.
What is a minimum monthly deposit? ›
Minimum monthly deposit: The minimum monthly deposit, or minimum balance, is the amount you keep in your account to take advantage of specific benefits or avoid fees.
What is minimum deposit system? ›
The RBI's current currency-issuing system is known as the Minimum Reserve System. It was passed into law in 1956. The RBI is required to retain a minimum reserve of an amount of about Rs 200 crores in foreign currencies, gold coins, and gold bullion under the Minimum Reserve System.
How to find minimum deposit? ›
Typically, you can find balance requirements on the financial institution's website. Look for accounts that don't come with minimum balance requirements. Some banks and credit unions don't have these requirements for certain accounts. Set up direct deposit.
What does "no minimum deposit" mean? ›
Many financial entities may require a minimum deposit—an initial amount of money—in order to get started. Fortunately, there are banks, credit unions, and other financial institutions that don't require a minimum opening deposit so you can stash and spend your money even if you're low on cash.
Can I deposit 5000 everyday? ›
Depending on the situation, deposits smaller than $10,000 can also get the attention of the IRS. For example, if you usually have less than $1,000 in a checking account or savings account, and all of a sudden, you make bank deposits worth $5,000, the bank will likely file a suspicious activity report on your deposit.
What is a $500 minimum daily balance? ›
For example: Tracy has a checking account with a “$500 minimum daily balance.” One day she makes purchases that drop her balance down to $200 but then deposits a $400 paycheck before the end of the day. The bank won't charge her the service fee because her final balance that day is $600.
Why do banks require a minimum deposit? ›
It allows the bank to have more deposits, which in turn allows them to lend more money and maintain certain regulatory financial ratio requirements. It also allows them to profit from fees if balances are not maintained.
How much can you deposit without? ›
Depositing a big amount of cash that is $10,000 or more means your bank or credit union will report it to the federal government. The $10,000 threshold was created as part of the Bank Secrecy Act, passed by Congress in 1970, and adjusted with the Patriot Act in 2002.
What is a deposit limit? ›
The cash deposit limit in savings accounts refers to the maximum amount of cash that an individual can deposit within a specified period without attracting the attention of tax authorities.
Summary of Best Free Checking Accounts With No Deposit
| Account | Forbes Advisor Rating | Learn More |
|---|
| NBKC Bank Everything Account | 4.6 | Learn More Read Our Full Review |
| Connexus Credit Union Xtraordinary Checking | 4.6 | Learn More Read Our Full Review |
| Ally Bank Spending Account | 4.5 | Learn More On Ally Bank's Website Member FDIC |
2 more rowsApr 11, 2024
No minimum deposit to open your account. Fifth Third Extra Time ® gives you more time to make a deposit and avoid overdraft fees (anytime before midnight ET the next business day). No Overdraft Protection transfer fee.
What is the minimum balance? ›
Also, sometimes known as the minimum balance, the Average Monthly Balance is the minimum amount of money that you need to maintain in your Savings Account to avoid non-maintenance charges.
What is an example of a minimum balance? ›
For example: Joan has a checking account with a "$1,600 minimum daily balance." One day she makes purchases that drop her balance down to $1,300 but then deposits a $400 paycheck before the end of the day. The bank won't charge her the service fee because her final balance that day is $1,700.
Do all banks require a deposit? ›
Some accounts don't require you to make a deposit right away, but others ask that you have $25 to $100 on hand to open one. If you already have an account at a different bank or credit union, you can simply transfer money from that existing account into the new one. Otherwise, a check or cash will work.
Should I put for deposit only? ›
If you're uncomfortable with someone else seeing your bank account number, you can write, “For Deposit Only” and then sign the check. This is a less secure option than including the account number, but most banks will follow the instructions and only accept the check for deposit.
What is average monthly deposits? ›
Monthly Average Balance refers to the average closing balance maintained in a Bank Account over the course of a month. It is calculated by adding up the closing balance of each day of the month and then dividing the total by the number of days in that month.
What is the smallest deposit for a house? ›
Most lenders (including the big four banks) will accept a minimum deposit of 5% of the property's value if you pay lender's mortgage insurance (LMI) and have a strong application. This means having a good credit score, a steady income and solid employment history.
What is the minimum balance to keep in a bank account? ›
The savings account minimum balance requirement for different banks ranges from Rs 2,000 to Rs 10,000, depending on whether you live in a metro, urban, or rural area. Moreover, if you fail to maintain the required average balance every month, you might be charged a penalty of up to Rs 500.
