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FABB Snapshot: No Surprise — Lowest Daily Balances On The Decline

This is the third installment of our look at how the economy has affected peoples’ use of their checking account. In the first post, we reviewed how people are more likely to overdraw their checking account now than a year ago. Last week, we showed how people have begun using ATM card more frequently. This week our focus is account balances.

If your financial situation changes because of a job loss or pay cut, you should re-evaluate whether your current checking account still suits your needs. In particular, many checking accounts require monthly minimums to avoid fees. You should definitely change accounts if you’re paying monthly fees — there are tons of checking accounts available that do not require minimum balances to avoid a monthly service charge. This advice applies to most people: Over 55% of FABB users now claim their lowest daily balances are below $500 — that’s a 12% increase over the last 3 months (see the figure below).

Understand Whether Your Account Uses “Lowest Daily Balance” or “Average Daily Balance”

Most checking accounts use either ‘lowest daily balance’ or ‘lowest average balance’ to determine whether or not to assess a monthly fee. Here’s how it works: If you have a balance of $500 for 29/30 days in a given month and a balance of $1 for 1 day, your:

• Lowest Daily Balance would be $1.
• Average Daily Balance would be $483.36.

Background information and notes: FABB users answer questions to estimate fees of checking accounts in their search results. Since FABB was launched, over 62,000 people have answered these questions to compare checking accounts.

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