Definition and Example of Minimum Deposit
A minimum deposit is the least amount of money required to open an account with a bank, credit union, or other financial institution. The minimum deposit can also refer to the minimum amount that must be maintained in your account each month to enjoy certain account benefits.
How Minimum Deposit Works
To understand how minimum deposits work, let’s take a closer look at two common types of minimum deposits.
Minimum Opening Deposit
The minimum opening deposit is the amount of money you will 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.
Minimum Monthly Deposit
Some banks or credit unions may require you to make a minimum monthly deposit to enjoy certain account benefits. For example, a bank may state that as long as you meet the minimum monthly deposit, you can avoid fees. By meeting the monthly minimum deposit, you may also earn a higher interest rate on your savings account.
How to Open a New Account
If you want to open a new checking, savings, certificate of deposit, or another account, make sure to research and choose the right financial institution for your situation and understand its minimum deposit requirements. Then follow these common steps.
Select the right account: Most financial institutions offer a variety of accounts. Explore your options and check the account you wish to open.
Gather documents: In most cases, you will need to provide two forms of government-issued ID. These can be a driver’s license and a passport. Additionally, you may be required to provide proof of address, such as a utility bill.
Confirm eligibility: Banks and credit unions have unique eligibility requirements. For example, you may need to be at least 18 years old to open a checking account. Ensure you meet your financial institution’s criteria.
Fill out the application: Depending on the bank or credit union, you may fill out an application online or in person. Provide accurate information and double-check your work.
Deposit the minimum: If there is a minimum opening deposit, put funds into your new account. If there is a minimum monthly deposit or balance requirement, make sure to meet it at all times.
Key Takeaways
The minimum deposit is the amount of money you need to open an account or benefit from features like no fees or higher interest rates. The most common types of minimum deposits are minimum opening deposits and minimum monthly deposits. If you fail to meet or maintain the minimum deposit requirements, your financial institution may impose consequences.
Sources
At The Balance, we use only high-quality sources, including peer-reviewed studies, to support the facts in our articles. Read our editorial process to learn more about how we fact-check and maintain the accuracy, reliability, and quality of our content.
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Source: https://www.thebalancemoney.com/what-is-a-minimum-deposit-5220990
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