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Typically, a zero balance account would refer to a checking account or a current account which is automatically set to be at a zero balance all the time. When the account holder makes a check payment, only the amount written on the check is transferred to the ZBA to maintain a zero balance as soon as the check has been paid. Funds are automatically transferred from a master account only when checks are presented, and only enough to cover those amounts each time.

Some of the applications of such an account are companies that require a zero balance account to eliminate excess balances in different accounts, and to monitor their payments more carefully. However, with the rise in banks charging average monthly and quarterly balances for their savings and current accounts, the term zero balance account is also popularly used these days for accounts that do not require the account holder to maintain any idle balance in their account.

Post demonetization in 2016, many savings accounts across the country were flush with funds and as a result, the interest that banks are required to pay on the savings account balance increased & several banks, both private and public sector began levying charges for non-maintenance of a certain minimum average monthly or quarterly balance.

With customers unwilling to abide by the new rules, the traditional zero balance account that does not accumulate charges in case of non maintenance of said balance, has become popular again. The zero balance USP is used to indicate that no unnecessary charges will be levied for operating the account.

In exchange for maintaining said balance, banks offer attractive interest rates and this segment has become quite competitive off late. There are different types of zero balance accounts depending on the context of the situation. However, as the name suggests, it is most likely that it is an account that does not require you to maintain any balance.