Do Business Bank Accounts Have Hidden Fees?

Using a business bank account offers a plethora of advantages for businesses both large and small. Not only does it provide companies with things like financing options, but transaction and deposit limits also tend to be higher than private accounts.

In some cases, in fact, having a business bank account is a necessity rather than a mere option. For instance, companies that need to be able to accept credit card payments, have a growing number of employees or are run by more than one person.

However, while business bank accounts certainly offer plenty of benefits for business owners, there are also several potential issues and disadvantages that need to be considered, including the possibility of hidden fees.

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What Kind of Fees Do Banks Charge for Business Accounts?

The types and amounts of business banking fees that you’re charged for your accounts is dependent on various factors, including the bank in question, your location, the type of account and these specific terms of agreement.

Here are some of the most common and straightforward fees you’re likely to be charged as a business bank account holder.

• Monthly Maintenance Fees/Service Fees:

Account service fees, often referred to as monthly account fees, are the fees charged by banks to allow you to keep your account open. The actual amount varies from one bank to the next, with some banks charging high fees and others charging nothing at all.

In some cases, banks may waive service fees entirely if account holders stick to specific requirements laid out at the outset, including things like having a minimum bank balance or making a minimum number of transactions per month.

• Out-of-Network ATM Fees:

Banks tend to charge account holders a fee for withdrawals that are done at ATMs that fall outside of their network area. It’s not necessarily a big deal if it happens once in a while, but the frequency of these charges will depend on where the network is and where you are.

Even though this is a fee that’s transparently set out when accounts are opened, it does tend to catch people by surprise from time to time, especially if they don’t realise they’re operating outside of their bank’s preferred network.

Thus, it’s always a good idea to ensure that you’re familiar with the area your bank covers so that you can avoid out-of-network fees cropping up at the end of the month.

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• Paper Statement Fees:

Fees charged for paper statements aren’t as common as it used to be, but some banks still charge account holders this as an additional fee that may emerge unexpectedly. It’s not a lot, but it adds up.

The fee is supposed to cover the costs of the paper bank account statement that account holders receive on a monthly basis, but since operations are increasingly moving online, paper statement fees are, for all intents and purposes, becoming a thing of the past. But not always! So make sure you check the terms and conditions of your business bank account.

• Overdraft Fees:

Overdraft fees are another way in which business bank account holders are often caught out, even though overdraft terms are clearly set out when business owners open new accounts.

An overdraft fee is a type of penalty account holders are charged for spending more than they have in their accounts, and sometimes, it can cost up to $30 for each infringement.

In some cases, account holders don’t necessarily get notified that they’ve gone into overdraft, which can lead to them making this mistake unintentionally or more often than necessary which eventually adds up to a massive monthly and annual expense.

Much like other sneaky bank fees, overdraft fees aren’t hidden from customers, but they do tend to take people by surprise, especially those who aren’t paying close attention to their spending.

• Fees for Account Closing:

Some banks charge account holders a penalty fee for closing business bank accounts within a certain time frame, often about 180 days. This isn’t an issue for most people who have properly evaluated the bank in question, but if you ever need to unexpectedly switch banks, you’re likely to be hit with an account closing fee.

Again, this will be laid out in the terms and conditions of your bank account, but make sure you’re aware of how much it is and when it’s enforceable so that it doesn’t take you by surprise down the line.

• Wire Transfer Fees:

Banks charge fees for wire transfers – that is, for electronic financial payments. These charges vary significantly depending on the bank in question, the amount of money being transferred, whether the transfer is occurring between the same or different banks and several other factors.

In fact, wire transfer fees are notoriously high. If your business doesn’t really need to make regular wire transfers, then it’s not too much of a problem. But for companies who need to make electronic payments frequently, transfer fees end up racking up, so it’s important to add these fees to your budget so they don’t take you by surprise.

• Insufficient Funds Fees:

An insufficient fund fee is a penalty incurred by business bank account holders for attempting to make any kind of transaction without having enough money in their account – essentially, you get charged for a bouncing payment.

Not all banks charge insufficient funds fees, and in some cases, there may be different thresholds for the penalty, but it often takes people by surprise and ends up being considered a surprising hidden cost that hasn’t been budgeted for.

Of course, insufficient funds fees are the easiest to avoid – you can simply make sure you check your account balance before making withdrawals. So, the best way to not have to pay this fee is simply to be aware and be careful.

• Dormancy Fees: 

Some, not all, banks charge account holders a penalty fee for leaving their accounts dormant for an extended period of time. Of course, the fee amount also varies from one bank to the next and is dependent on the dormancy period.

Dormancy fees tend to take small business owners, especially by surprise, and it’s the kind of expense that tends to rack up if you’re not paying attention.

Again, it’s an easy one to avoid – just keep an eye on the account activity and keep it active by ensuring you’re making regular monthly payments, even if they’re small.

Avoiding Absorbitant Business Banking Fees

In reality, there are no business banking fees that are truly hidden – all fees have to be set out in account terms and conditions.

However, what we really mean by hidden is that there are fees that many people forget about or don’t completely understand, and these end up cropping up later and adding up to significant amounts down the line.

Ultimately, the best way to avoid having to pay unnecessary account fees for business bank accounts is simply to be aware of the terms and conditions of your account and keep in touch with your account activity.

Some of the most important things to look out for and be aware of include:

• Available Funds: Knowing exactly how much you have in your bank account will help you avoid going into overdraft or being charged for having insufficient funds.
• Scope of the Bank’s Network: Ensure that you know exactly where your bank operates so that you can make sure you don’t make ATM withdrawals outside of the network when it’s avoidable.
• Account Activity: Keep an eye on everything that’s going on within your account so you can mak sure it’s remaining active enough to avoid dormancy fees.
• Wire Transfer Strategy: Ensure that you’re never making unnecessary wire transfers. For instance, when you pay someone, make sure you include everything you’ll need to pay them for the foreseeable future (as far as is realistic) so that you don’t pay them multiple times throughout the month when you could’ve just paid them once.
• Opt Out of Paper Statements: If you’d like to, check if you can opt out of receiving paper statements. Not only is it better for the environment, but it’ll also save you on statement fees.

In addition to these specific things you ought to be aware of, avoiding unnecessary business bank account fees is really just about being aware of the terms and conditions of your account, making sure that the bank and account you choose suits your specific business, and keeping an eye on your own banking activities.