The Hidden Fees of Business Bank Accounts (and How to Avoid Them)

What are the Most Common Business Bank Account fees?

Financial institutions generally levy bank fees for various services and actions related to your business account. While some fees are unavoidable, innovative banking practices can minimise or eliminate some fees entirely.  

Here's a rundown of the most common culprit.

Monthly Maintenance/Service Fees

Monthly maintenance or service fees are recurring charges just to keep your business bank account open. These fees vary considerably, with some banks offering fully fee-free accounts while others charge upwards of $15 per month. 

Some banks may waive this fee entirely if you meet conditions like maintaining a minimum balance or having a set number of monthly transactions. These fees can eat into your bottom line, so consider them a fixed business expense if you can only partially meet the waiver requirements.  

Even a seemingly small  $10 monthly fee translates to a $120 annual expense.

How to avoid it? 

Compare banks thoroughly. Some offer entirely fee-free accounts, while others waive the fee if you maintain a certain balance or have regular activity. If your bank falls into the latter category, adjust your spending and deposit habits to meet their requirements reliably. 

Online-only banks often have the benefit of lower overhead, allowing them to offer lower-fee accounts as well.

Thriday offers up to 10  $0 monthly access fee business bank accounts* designed for cash flow control

Out-of-Network ATM Fees

Expect a fee whenever you use an ATM outside your bank's network. These fees may be charged by both your bank and the ATM owner. Using out-of-network ATMs occasionally isn't a big deal, but frequent reliance on them makes those fees a significant expense. For example, ten monthly withdrawals could easily lead to over $45 in fees.

How to avoid it?

The easiest way to avoid this is to become familiar with your bank's ATMs via their website or app and use those whenever possible. When travelling, research your bank's availability at your destination. 

If an out-of-network ATM is unavoidable, try withdrawing more at once to reduce the frequency and lessen the overall fee burden.

With Thriday all Regional Australia Bank ATMs are free to withdraw from and you can deposit cash in over 3,000 Australia Post Offices via Bank@Post

Overdraft Fees

If you spend more than you have in your account, the bank may cover it but slap you with a steep fee, often around $35. These fees can add up astonishingly fast. Just a few overdrafts in a month could set your business back more than $100, draining valuable funds.

How to avoid it?

Protect yourself by setting up low-balance alerts in your banking app or online profile. Regularly monitor your spending to prevent surprises. Many banks offer overdraft protection, where they'll transfer money from a linked account if your primary balance is insufficient. This usually comes with a fee but is still far cheaper than most overdraft fees.

Insufficient Funds Fees

These are similar to overdraft fees. If you attempt a transaction without enough money, the bank blocks it and still charges you. Not only is there the expense of the fee itself, but failed payments can hurt your reputation and stall vital business purchases.

How to avoid it?

The same strategies apply: monitor your balance closely, use low-balance alerts, and consider overdraft protection.

Paper Statement Fees

Charging $1-5+ per month just to receive a mailed paper copy of your statement is becoming increasingly outdated. This is an unnecessary expense in the digital age. If you don't carefully utilise those mailed statements, they become pure waste!

How to avoid it?

Avoid this by going fully digital! Most banks allow you to opt into online statements for free within your account settings. If you absolutely prefer paper, some banks may still offer it for free, so it's worth checking.

Wire Transfer Fees

Wire transfers allow you to send money electronically immediately but come with fees that vary wildly. Factors like whether the recipient is at the same bank, domestic vs. international transfers, and how the wire is initiated (online vs. with a teller) all influence the cost. 

These fees can be shockingly high per transfer,  so businesses that frequently use wires must heavily factor that expense into their budgeting.

How to avoid it?

For less urgent needs, alternatives like apps with international wallets (Wise, PayPal) or even traditional checks might be free or have minimal fees (but who has time for paper?). Forex businesses specialising in low-cost wires, especially for international transfers, are worth searching for if your business does these frequently.

Account Closing Fees

Some banks charge a fee if you close your business account too soon after opening it (usually within 180 days). While a one-time expense, these fees can be significant if you unexpectedly need to switch banks. This could make you hesitate to leave even if you discover your initial choice of bank isn't a good fit.

How to avoid it?

Avoid this by doing your homework before opening a new account. Ensure the bank's long-term value and fee structure suit your business. If you must close early, ask your bank about the specific penalty-free timeframe.

Dormancy Fees

If a business account stays completely inactive for an extended period (timeframes depend on the bank and state), dormancy fees may kick in. Eventually, the state could even take control of the funds. These fees directly reduce your available funds, and the longer the account sits unused, the higher the financial losses.

How to avoid it?

Keep the account minimally active with a small recurring payment or transfer. If the account is unused, close it officially to prevent fees from building up without your knowledge.

The Key Takeaway

Hidden fees may seem like a sneaky ploy by banks, but you're not powerless! Understanding these fees is the first step toward regaining control of your business finances. The tips outlined in this article give you the tools to make informed banking decisions and avoid unnecessary expenses.

Remember, every dollar you save from fees is a dollar you can reinvest in your business's growth, innovation, or resilience during tough economic times. Don't underestimate the power of those seemingly small savings – over time, they add up to a substantial impact.

You can see how low Thriday’s fees are here.

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^* https://www.bankrate.com/banking/checking-fees-survey/ 

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