Thinking of setting up a business bank account? Many banks charge customers fees for using these accounts. These fees can come in various different forms including:
- Monthly flat fees
- Transaction fees
- Deposit/withdrawal fees
- Foreign exchange fees
- Overdraft fees
While these fees are typically very small, they can add up in the long run and ultimately affect your profits. It’s important to look into these fees when choosing a business bank account as some could potentially end up being less expensive than others, depending on how you use them. Read on to learn more about each of these fees…
Monthly flat fees
One of the most common business bank account charges is a monthly flat fee. In the US, this can vary from $10 to $50 per month. Some banks will offer an introductory no-fee period of up to a year to attract customers. Others will not charge you a monthly fee provided that you maintain a minimum balance or make a certain amount of transactions. It’s important to compare these fees and not be caught out by bank accounts that appear ‘free’ for the first few months. A benefit of these fees is that they are often easy to budget.
Transaction fees
Some business bank accounts prefer not to charge a monthly flat fee, but to instead charge a small fee on every transaction. This may only be a small fee of $0.25 or $0.50, but it could get expensive if you’re handling lots of transactions per month (i.e. retail or hospitality companies). These transaction fees are usually charged on top of merchant fees, potentially making small transactions unprofitable. However, for companies that deal with only a few large transactions per month, this fee structure can be very low-cost. It’s worth noting that many accounts will also allow a certain number of fee-free transactions per month.
Deposit/withdrawal fees
Other accounts won’t charge you a monthly flat fee or any transaction fees, but may charge you if you deposit any cash or checks into the account or withdraw any money. Some banks do this to discourage money laundering or use of checks, encouraging you to keep all transactions digital. If you’re an online business, you may find that this fee structure results in few to any fees. However, if you’re a business that accepts many cash payments or checks, this type of account could sting you.
Foreign exchange fees
Many business bank accounts charge fees for foreign currency exchanges. If you deal with international customers and accept payments in different currencies, you may want to look into how much you will be paying in FX fees. Online world accounts are often the best options for companies that handle lots of international payments, as they typically don’t charge these fees. For those interested in this, it’s possible to open a business bank account online.
Overdraft fees
Finally, it’s important to consider overdraft fees. Some business bank accounts will provide an overdraft and charge you fees every time you enter it. Others will allow you a free limit to spend up to, but charge you fees if you go over this limit. Compare these fees if you’re likely to need an overdraft on your account.
