Average monthly balance is the sum of your account balance on specific days each month, divided by the number of days the bank measures
Banks calculate average monthly balance differently depending on the institution and account type. Most commonly, a bank adds up your account balance at the end of each day for a month, then divides by the number of days in that month. Some banks measure balance on the last day of each statement cycle instead. A few measure only on business days, or take a snapshot on the first and last day and average those two figures. The method matters because it determines whether you hit minimum balance requirements, avoid monthly fees, or may have access to for higher interest rates on savings accounts.
Your bank's account agreement or fee schedule states which method they use. If you cannot find it there, call the bank directly and ask: "How do you calculate average monthly balance for my account type?" The answer will be specific to your account — a checking account and a savings account at the same bank might use different methods.
Key Takeaways
- Average monthly balance is usually calculated by adding your daily closing balance for each day in the month and dividing by the number of days, though some banks use different methods.
- Banks use average monthly balance to determine whether you owe a monthly fee, earn interest on savings, or may have access to for account perks like fee waivers.
- Your account agreement specifies exactly how your bank calculates this figure — check there first or call your bank to confirm.
- A single large deposit or withdrawal mid-month can significantly raise or lower your average, even if your balance is normally much lower or higher.
- If you are close to a minimum balance threshold, timing deposits strategically can help you stay above it without keeping excess money in the account permanently.
Why banks measure average monthly balance
Banks use average monthly balance to decide whether you meet the terms of your account. Many checking and savings accounts waive the monthly maintenance fee if you maintain a minimum average monthly balance — often $500, $1,000, or $2,500 depending on the account tier. If your average falls below that threshold, you pay the fee, usually $5 to $15 per month.
Savings accounts sometimes tie interest rates to average monthly balance. A bank might offer 4.5% APY on balances of $10,000 or more, and 3.5% on smaller balances. Your rate for the month is determined by whether your average monthly balance crossed that line. Money market accounts and some checking accounts with rewards work the same way.
A few banks also use average monthly balance to determine overdraft protection or credit decisions, though this is less common. The logic is simple: average balance is a more stable measure of how much money you actually keep in the account than a single-day snapshot, which can be misleading if you just deposited payroll or paid a large bill.
How the calculation actually works
The most common method is the daily balance method. Your bank records your account balance at the end of each business day. At the end of the month, it adds all those daily balances together and divides by the number of calendar days in the month (28, 29, 30, or 31). That quotient is your average monthly balance.
Example: Your checking account balance is $2,000 on day 1, $1,800 on day 2, $3,200 on day 3, and so on through day 30 of a 30-day month. The bank adds all 30 daily balances and divides by 30. If the sum is $60,000, your average monthly balance is $2,000.
Some banks use the statement period method instead. They calculate your balance only on the first and last day of your statement cycle, add those two figures, and divide by two. This method is simpler but can be gamed — you could deposit a large sum on the last day of the month and withdraw it the next day, and it would count toward your average.
A third method, less common, counts only business days. If a month has 22 business days, the bank adds your balance for those 22 days and divides by 22, ignoring weekends and holidays. This method slightly favors accounts that dip on weekends.
How deposits and withdrawals move your average
Every transaction changes your daily balance, which changes your average. A $5,000 deposit on day 15 of a 30-day month raises your average by roughly $2,500 (the deposit sits in the account for the remaining 15 days, so it contributes $5,000 × 15 ÷ 30 = $2,500 to the total). A $5,000 withdrawal on day 15 lowers your average by the same amount.
Timing matters. A deposit on day 1 affects your average for all 30 days. A deposit on day 30 affects it for only one day. If you are trying to stay above a $1,000 minimum balance to avoid a fee, depositing $500 on day 1 is far more effective than depositing $500 on day 30.
Paycheck deposits and bill payments both move your average. If you receive payroll on the 15th and spend most of it by the 20th, your average reflects that mid-month spike and dip. If you receive payroll on the 1st and spend it gradually, your average is lower. The pattern of your cash flow, not just the total amount, determines your average monthly balance.
When average monthly balance affects your fees and rates
Most banks publish their minimum balance requirements in the account fee schedule, which you can find online or request from a branch. Common thresholds are $500 for basic checking, $1,000 or $2,500 for premium checking, and $10,000 or higher for money market accounts. If your average monthly balance falls short, you pay the monthly fee at the end of the statement cycle.
Savings account interest rates often have tiers. A bank might offer 4.5% APY on average monthly balances of $25,000 or more, 4.0% on $10,000 to $24,999, and 3.5% on $1 to $9,999. Your rate for the month is locked in based on your average, so a balance that dips below a tier threshold mid-month means you earn the lower rate for that entire month, even if you recover later.
Some banks waive overdraft fees if you maintain a certain average monthly balance. Others offer higher ATM reimbursement limits or waive wire transfer fees for customers above a threshold. Check your account agreement to see which perks tie to average monthly balance at your bank.
How to find your average monthly balance
Your bank statement lists your average monthly balance, usually near the top or bottom of the first page. If it does not appear there, log into your online banking portal and look for a section labeled "Account Summary" or "Statement Details." Some banks require you to download the PDF statement to see it.
If you cannot find it online, call your bank's customer service line and provide your account number. They can tell you your average monthly balance for the current month and any previous month you ask about. You can also visit a branch in person and ask a teller to print it.
If you want to calculate it yourself to verify the bank's number or forecast next month's average, ask your bank which method they use (daily balance, statement period, or business days only). Then request a list of your daily balances for the month, or download your transaction history and track your balance manually. Most people do not need to do this — the bank's published figure is reliable — but it is possible if you want to double-check.
Strategies to maintain a higher average without keeping excess cash
If you are close to a minimum balance threshold, timing large deposits can help. Deposit paycheck or other regular income on the first day of the month rather than mid-month. This spreads the balance across more days and raises your average. If you must make a large withdrawal, do it late in the month so it affects fewer days of the average.
Some people maintain a separate savings account at the same bank and transfer money between checking and savings strategically. If your bank counts balances in both accounts toward a combined minimum, you can keep most of your money in savings (where it earns interest) and transfer just enough to checking to meet the threshold on days when you know the bank measures balance. This works only if your bank's policy allows it — some do, some do not.
Another approach is to switch to a bank with no minimum balance requirement. Many online banks and credit unions do not charge monthly fees regardless of balance. If you are paying $10 to $15 per month to maintain a minimum, the cost of switching may be worth it, especially if the new bank offers better interest rates or lower fees elsewhere.
Frequently Asked Questions
Does my average monthly balance include money in linked savings accounts?
It depends on your bank's policy. Some banks count only the checking account balance toward the minimum. Others combine checking and savings balances. A few count only savings balances for savings account minimums and only checking for checking account minimums. Check your account agreement or call your bank to confirm which accounts are included in the calculation.
What happens if my average monthly balance is below the minimum?
You are charged the monthly maintenance fee, typically $5 to $15, at the end of your statement cycle. The fee is deducted from your account balance. If you fall below the minimum for multiple months, the fees compound. Some banks waive one or two months per year if you bring your balance above the minimum later, but this varies by institution.
Can I raise my average monthly balance by depositing money for just a few days?
Yes, but the effect is small. A $10,000 deposit on day 28 of a 30-day month raises your average by roughly $667 (10,000 × 2 ÷ 30). A deposit on day 1 raises it by $10,000. If you need to boost your average, deposit money early in the month and leave it there through the end of the statement cycle.
Do transfers between my own accounts count as deposits or withdrawals?
Yes. A transfer from savings to checking is a deposit to checking and a withdrawal from savings. Both accounts' balances change, and both averages are affected. If you are trying to maintain a minimum in checking, transferring money in early in the month helps more than transferring it in late.
How far back can I look at my average monthly balance?
Most banks show average monthly balance on statements for the past 12 to 24 months if you log into your online account or request archived statements. Some banks keep records going back several years. If you need historical data for a specific reason, contact your bank and ask how far back they can retrieve it.