February 21, 2024
Understanding Business Bank Account Fees

Banks charge business banking fees for business accounts as a source of revenue and payment for their costs of operation. Some fees are paid monthly, while others are paid on a one-time basis. If you are a small business owner seeking to trim down your expenses, learning about the different types of business bank account fees and how to avoid them is essential to save you from paying hefty fees over time.

Key takeaways

  • The common types of business bank account charges include excess transaction fees, cash deposit fees, nonnetwork ATM fees, and overdraft fees.
  • Some banking fees, such as those for monthly maintenance/service, can be waived by meeting specific conditions set by the bank.
  • Choosing the right account that matches your needs allows you to avoid regular bank charges, such as monthly service fees, cash deposit fees, and excess transaction fees.
  • You can sign up for account alerts and overdraft protection plans to avoid overdraft and nonsufficient funds (NSF) charges.
  • There are traditional banks, credit unions, online-only banks, and financial technology (fintech) platforms that offer free business checking accounts.

Types of Business Bank Account Fees

The type of business account fees that banks collect can vary. Some of the business banking fees mentioned below will not apply to some banks.

1. Monthly Maintenance/Service Fee

Banks often charge users a monthly maintenance or service fee for keeping funds in a bank account. However, most banks waive the fee when you maintain a fixed daily, monthly, or average balance in the account.

Some banks will also drop this fee if you meet certain conditions, such as spending a set amount using your debit or credit card, enrolling in e-statements, or having qualified transactions through a bank’s merchant services.

Monthly maintenance/service fees can range from $5 to $75. Premium business checking accounts often have high monthly fees.

How to avoid this fee: Conduct a business banking fees comparison to see which bank account has no monthly or easy-to-waive fees. Ensure you can meet the required minimum balances or conditions to benefit from monthly maintenance/service fee waivers.

Most online banks typically offer a business bank account without monthly maintenance fees. Check out our guide to the best online business banks for options, but before opening an account, refer to our guide on how to open a business bank account for a downloadable checklist of documents banks typically require.

2. Excess Transaction Fee

When you go over the fee-free limit of transactions, an excess transaction fee is charged by banks. Most low-tier business checking accounts offer a 50 to 250 monthly transaction allowance, whereas mid-tier to high-tier accounts provide 250 to 1,000 fee-free transactions each month. Meanwhile, business savings accounts often have a low withdrawal or transfer limit of six.

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Excess transaction fees for business checking accounts can range from 25 cents to 50 cents. Meanwhile, for business savings accounts, the fees can run from $3 to as much as $25.

How to avoid this fee: Select the right business bank account that matches your business’ monthly transaction volume. As transactions increase, you can switch to a new business bank account.

3. Cash Deposit Fee

Banks may restrict the amount of cash you can deposit into your business checking account. They can charge a cash deposit fee beyond a certain limit. Some will allow cost-free monthly cash deposits up to $3,000, whereas other banks may set a maximum of $25,000 for high-tier accounts. If your business is cash-reliant, choose a bank with low cash deposit fees or high cash deposit allowance.

The cash deposit fees for exceeding the limit are typically around 20 to 30 cents per $100. Some banks will charge fees for every additional $1,000 deposited past the limit.

How to avoid this fee: Decide which business bank account satisfies your cash deposit needs. You may also want to consider traditional banks with more brick-and-mortar branches near your business location.

4. Wire Transfer Fee

Through wire transfers, you can send money from bank to bank. The fee for wire transfers can vary per bank for domestic and international transactions. Some banks may also offer free inbound or outbound wire transfer services.

Wire transfers are ideal when sending or receiving substantial funds since the fees can be steep. This payment method can be faster compared to other payment types.

Domestic wire transfer fees can range from $10 to $35. Meanwhile, international wire transfer fees can fall anywhere from $15 to $75, depending on if the transaction is initiated online or through a branch.

How to avoid this fee: Use wire transfers when you need to send or accept a large amount of money. If that is not the case, you can try other options, such as using your bank’s mobile app or other popular payment apps, such as Zelle and Venmo.

Mercury is a fintech platform offering free wire transfers for domestic and international transactions. Check out our Mercury business checking review to learn more.

5. Automated Clearing House (ACH) Fee

ACH payment is commonly used for paying bills and vendors online and receiving customer payments. Using the ACH network, you can electronically transfer money from one bank to another. An ACH fee may be charged by banks.

Compared to other payment types, ACH transfers are considered safer since you must provide personal and bank account information. ACH transfers may take one to four business days.

Most internet banks won’t charge next-day ACH fees, while some traditional banks will charge $10. For same-day ACH transfers or payments made in real-time, the fee can be around 1% of the transferred amount.

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How to avoid this fee: Consider opening a business bank account at an online bank or fintech offering ACH transfers for free.

6. Overdraft Fee

Sometimes, you may overlook how much balance you have in your business bank account, which leads to overdrawing your funds. When this happens, the bank may cover your transaction and charge an overdraft fee.

You can avoid this incident by enrolling in business overdraft protection. This way, your transactions are covered by immediate transfers from a secondary account, small line of credit, or credit card.

Overdraft fees typically cost $30 to $40. However, some banks may not charge overdraft fees or may offer free overdraft protection transfers.

How to avoid this fee: Aside from signing up for a business overdraft protection plan, you can set up account alerts. This way, you will be notified immediately when your business bank account balance reaches a critical threshold. You can then perform fund transfers to cover future transactions.

7. Returned Item/NSF Fee

When you don’t have enough balance in your account to cover your transaction and the bank rejects the transaction, a returned item fee, or NSF fee, is charged. Even after the bank collects this fee for reversing the transaction, you may still be charged additional fees from merchants or service providers. NSF fees can range from $27 to $40.

How to avoid this fee: Similar to overdraft fees, you can enroll in business overdraft protection or sign up for account alerts to keep track of your current account balance and spending.

8. Nonnetwork ATM Fee

When you use your business debit card to withdraw money from an out-of-network ATM, you may be hit with nonnetwork ATM fees from your bank and the third-party ATM operator.

Traditional banks often charge high out-of-network ATM fees. These can reach $2.50 to $3 for domestic transactions and $5 for international transactions, on top of the ATM operator surcharges.

How to avoid this fee: Since ATM fees can quickly add up, pick a bank with a wide ATM network for free withdrawals. You can also download the bank’s mobile app to find the nearest in-network ATMs.

Some online-only banks, such as Axos, offer unlimited domestic ATM fee refunds. See our Axos Bank business checking review for information. Novo also reimburses ATM fees up to $7 at the end of the month, and you can learn about it by reading our review of Novo business checking.

9. Early Account Closing Fee

When banks offer new business account promos, several people may rush to open one. After earning the cash bonus, they will then close their accounts.

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To prevent this situation, banks can charge an early account closing fee. Some may require accounts to remain open for 90 to 180 days to waive the closure fee. Early account closing fees can be as low as $5 or as high as $50.

How to avoid this fee: Always review the bank’s policies before closing your account. Prior to account opening, research if the bank can meet your business needs for a long time. If not, then wait for the prescribed period to end to skip paying the closure fee.

10. Dormancy/Inactivity Fee

Another business bank account fee that customers can be unprepared for is a dormancy fee or inactivity fee. Banks collect this fee when you have no transaction activity in your account for an extended period. When there is no account movement within two years, some banks may consider that a dormant bank account.

Some banks may not charge dormancy/inactivity fees, but those that do collect a monthly fee ranging from $5 to $20. If ignored for long, dormancy fees can deplete your entire balance.

How to avoid this fee: Schedule a regular deposit or withdrawal to keep your business bank account active. You can also establish an auto-payment setup for recurring monthly bill payments. However, if the account does not serve any purpose, consider closing it immediately.

Comparison of Business Banking Fees Between Checking Accounts

Here is a comparison table between some of Chase’s and Bank of America’s business account fees.

Comparison of Business Banking Fees Between Savings Accounts

Below is a comparison table between some of Live Oak Bank and Axos Bank’s business account fees.

You may be interested to check out our top-recommended business savings accounts before opening a business bank account.

Free Business Checking Account Options

Banks differ on how much business bank account fees they charge to customers. The good news is that several financial institutions offer a free checking account option. See the table below to find a provider that offers a free business checking account that fits your needs.

You may be interested to see our list of the leading free business checking accounts for alternatives.

Bottom Line

Comparing business banking fees can be a good factor in finding which account suits your needs. Some of these fees must be paid regularly, such as monthly maintenance charges, which can add to your financial expenses. While you might be unable to avoid paying all the fees for business bank accounts, learning how much banks charge helps you minimize and avoid these fees as much as possible.