How to Calculate Average Quarterly Balance

How to Calculate Average Quarterly Balance

9 February, 2024

There are different types of bank accounts for various segments with a minimum balance that needs to be maintained in the account. The maintenance required differs from Average Monthly Balance (AMB) or Average Quarterly Balance (AQB) depending on the type of account. Minimum balance is simply the minimum threshold below which your bank balance should not go. However, for average balance, the calculation is different. Read more to find out how it is done.

What is Average Quarterly Balance (AQB)?

The average quarterly balance is the average balance you are required to maintain in your bank account during a period of 3 months i.e., 1 quarter.

How to calculate AQB ?

The average quarterly balance can be calculated by adding the closing balances of each day and dividing the sum by the number of days in a quarter. Also, if anyone does not maintain the balances, they must pay some charges. Following is the average quarterly balance formula:

AQB = Sum of closing balances of each day in a quarter / Total number of days in a quarter

The above formula considers the closing balance each day for 3 consecutive months in a quarter. As you have 3 months in hand, you will not be penalized even if your balance goes below the quarterly average balance limit. You can have ₹1 lakh on one day and zero balance in your bank account on 9 other days. Still, your average balance will be ₹10,000 for all the 10 days. You won't be penalized for having zero balance on 9 days as ₹1 lakh covers the shortfall on all the remaining days.

Even HDFC Bank Current Account follows the average quarterly balance principle for certain accounts to provide more flexibility to the account holders. Things you should know about Average Quarterly Balance

Here are some of the facts about average quarterly balance you should know:

  • Usually, the basic savings account does not come with average quarterly balance requirements.

  • You may have to pay the non-maintenance charge in case you fail to maintain the average quarterly balance requirement. The amount of charge depends on your bank and may vary depending upon the amount of shortfall in maintaining the average quarterly balance.

  • The monthly balance requirement and average quarterly balance requirement is usually lower in the public sector banks as compared to the private banks.

  • Certain banks also follow the average monthly balance instead of the average quarterly balance. You should inquire with your bank about the type of balance you are required to maintain and associated non-maintenance charges.

  • Currently, the following types of savings accounts follow AQB principle- Regular Savings Account in rural areas, Speciale Platinum, Speciale Gold, Speciale Senior Citizen, Super Kids. Click here to check the latest account balance requirement of your savings account.

Average Monthly Balance (AMB)

While we have understood the average quarterly balance, it is better to also understand the average monthly balance as many banks follow this concept of balance maintenance. The average monthly balance is similar to the average quarterly balance but here, the calculation is done every month instead of on a quarterly basis.

Therefore, the closing balance each day for a particular month will be considered. The formula for calculating the average monthly balance is as under:

AMB = Sum of closing balances of each day in a month / Total number of days in a month

The only difference between the quarterly and monthly average balance is the time period. HDFC Bank Savings Account follows the average monthly balance. In a nutshell

Average Quarterly Balance (AQB) provides more flexibility to the account holders to maintain the minimum required balance in the bank. The AQB calculation is simple and by understanding, you can save the unnecessary balance non-maintenance charges. It is also important to be aware of the balance requirements and consequential non-maintenance charges to choose the right bank account for your needs.

HDFC Bank too follows the average quarterly balance calculation principle to provide greater flexibility to the account holders. With lower penal charges supported by modern-day banking features, HDFC Bank has been one of the preferred banks in India. Visit HDFC Bank now to enjoy a seamless banking experience.

*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.

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