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Understanding Business Banking Fees & How To Minimize Them

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Business banking fees can be a significant expense for companies, and it is essential to understand them to avoid unnecessary expenses. A business banking fee is a charge assessed by a financial institution for various services related to maintaining and managing a business account. In this article, we will outline the different types of business banking fees, and we will discuss ways to minimize these fees.


Types Of Business Banking Fees


Monthly Maintenance Fees

Most business banking accounts require a monthly maintenance fee, which is a fee charged for maintaining the account. The fee covers the costs associated with maintaining the account, such as account statements, customer service, and online banking. Monthly maintenance fees can range from a few dollars to hundreds of dollars per month, depending on the type of account.


Transaction Fees

Transaction fees are charged for each transaction made on the account, such as deposits, withdrawals, and transfers. The fee can be charged per transaction or can be a set fee for a certain number of transactions per month. Transaction fees can add up quickly, especially for companies that make a large number of transactions.


ATM Fees

ATM fees are charged when a business uses an ATM that is not affiliated with their bank. ATM fees can be as high as $5 per transaction, and if a business uses ATMs frequently, the fees can add up quickly.


Wire Transfer Fees

Wire transfer fees are charged when a business sends or receives a wire transfer. The fee can be a flat fee or a percentage of the amount transferred. Wire transfer fees can be expensive, especially for large amounts of money.


Overdraft Fees

An overdraft fee is charged when a business spends more money than it has in its account, and the bank covers the overdraft. Overdraft fees can be high, and if a business has multiple overdrafts in a short period, the fees can add up quickly.


Cash Handling Fees

Cash handling fees are charged when a business deposits or withdraws cash from its account. The fee can be a percentage of the amount deposited or withdrawn or a flat fee per transaction. Cash handling fees can be significant for companies that deal with a large volume of cash.


Ways To Minimize Business Banking Fees


Research Different Business Banking Options

It is essential to research different business banking services before opening an account. Some banks offer lower fees, while others may have fee waivers for certain account types or transaction limits. By doing research, businesses can find a bank that fits their needs and minimizes their fees.


Choose A Bank With Low Fees Or Fee Waivers

Businesses should choose a bank that offers low fees or fee waivers. Some banks offer free checking accounts for businesses that maintain a certain balance or have a certain number of transactions per month. By choosing a bank with low fees or fee waivers, businesses can save a significant amount of money.


Monitor Account Activity & Avoid Unnecessary Transactions

Monitoring account activity is essential to avoiding unnecessary fees. Businesses should review their account statements regularly and avoid unnecessary transactions, such as ATM withdrawals from non-affiliated banks. By monitoring their account activity, businesses can avoid fees and save money.


Bundle Services To Save Money

Bundling services is another way businesses can save money on fees. Some banks offer discounts or reduced fees when businesses use multiple banking services. For example, if a business uses the bank’s merchant services, they may receive a discount on their transaction fees.


Negotiate With The Bank For Better Rates

Businesses can also negotiate with their bank for better rates. If a business has a good relationship with their bank and maintains a significant balance, they may be able to negotiate lower fees. By negotiating with the bank, businesses can save money on their fees.


Investing Idle Cash

In addition to minimizing fees, businesses can also consider investing idle cash. Idle cash is cash that is not needed for immediate operations or expenses. Instead of letting idle cash sit in a low-interest savings account, businesses can invest it in short-term securities or money market funds. By investing idle cash, businesses can earn a higher return on their cash while still maintaining access to the funds when needed.

Investing idle cash can also help businesses offset banking fees. For example, if a business earns $100 in interest from investing idle cash, that $100 can be used to offset banking fees, effectively reducing the fees.

In conclusion, business banking fees can be a significant expense for companies, but there are ways to minimize them. By researching different business banking options, choosing a bank with low fees or fee waivers, monitoring account activity, bundling services, and negotiating with the bank for better rates, businesses can save a significant amount of money on fees. In addition to minimizing fees, businesses can also invest idle cash to earn a higher return on their cash and offset banking fees. By implementing these strategies, businesses can save money and make the most of their business banking services.


I'm a passionate full-time blogger. I love writing about startups, how they can access key resources, avoid legal mistakes, respond to questions from angel investors as well as the reality check for startups. Continue reading my articles for more insight.

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