How to Get the Most from Your Bank, for Less
It's rather alarming to realize that many banks today make most of their money by charging customers a myriad of fees associated with even the simplest, most common types of transactions. This is especially so for business and commercial accounts. It's probably not possible to avoid all fees, but the following guidelines can help a small business cut banking costs significantly.
Try to set up accounts that have no monthly service charges. Standard business checking accounts usually have a monthly fee associated with them, but many banks now are offering free business checking. If your bank doesn't offer these, or won't waive fees, consider looking at other banks that will.
Free business checking should include at least:
- No monthly service charge on individual accounts
- No minimum balance
- At least 200 or 250 checks/debit items per month
- No charge for additional deposits
- Monthly statements (preferably with imaged checks)
- Free initial order of checks
- Discounted safe deposit box
- Free online banking
- Free automatic bill paying
To avoid fees and earn interest on deposits, ask about setting up an online savings account or a money market account. These usually have no fees if a minimum balance is maintained, and interest on deposits is often comparable to a six-month or one-year CD. The drawback of online savings and money market accounts is that usually a maximum number of withdrawals or checks can be written monthly.
Speaking of minimum balances, make sure you understand the threshold below which additional monthly fees will be charged on all your business and commercial accounts. If an account comes with a pre-established minimum threshold, and you feel that you may dip below this from time to time, talk with your banker in advance for alternatives to avoid charges.
You can avoid overdraft charges by linking checking accounts to savings or money market accounts in which you keep larger amounts. This will enable funds to be transferred automatically if you should write a check for more than you have in your checking account. Talk with your banker to see if you can reduce or avoid any charges for overdraft protection on an account.
Another way to avoid overdraft charges is to set up automatic notification when your account reaches a certain level. Ideally such notification would be by e-mail to avoid the delay of regular mail. Automatic notification is most effective when used in conjunction with linking your checking accounts with savings or money market accounts.
If overdrafts are part of your business plan and in effect will be considered loans, work with your banker to minimize ongoing charges and secure reasonable interest rates.
Setting up automatic ongoing payments either online or by electronic transfer will virtually eliminate the possibility of charges caused by late payments of utilities, leases, rents, loans, etc. Of course, you'll need to monitor these payments and record them regularly to avoid going into negative territory in your account.
Before signing up for checking accounts that offer extras such as insurance, overdraft protection or other perks, consider the extra fees involved.
Get to know your banker so you can get help secure all the advantages mentioned above.
Related: NFIB's bank account resources