business-banking

How to avoid business banking fees

Information verified correct on December 10th, 2016

Avoid unnecessary business banking fees and improve your bottom line.

When you run your own business, every dollar matters. The more money that either ends up in the profit column or is re-invested back into the business, the better off you will be.

But sometimes business banking fees can have a significant impact on your bottom line. From account-keeping fees to transaction fees and a range of other penalties, the extra charges your bank imposes can quickly add up to a sizable amount.

Here’s what you need to do to avoid business banking fees and keep your business’s finances in the best possible shape.

RaboDirect Business Notice Saver

Business Savings Account Offer

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  • Maximum Rate: 2.10% p.a.
  • Standard Variable Rate: 2.10% p.a.
  • Bonus Rate: 0.00% p.a.
  • Monthly Account Fees: $0
  • Minimum Balance: $0
  • Minimum Deposit: $0

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Rates last updated December 10th, 2016.

Westpac Business Cash Reserve

Interest rate was changed from 2.10% to 1.70%

March 19th, 2015

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Debbie Mariano Debbie
$
$
months
Maximum Variable Rate p.a. Standard Variable Rate p.a. Bonus Interest p.a. Fees Min Bal / Min Deposit Interest Earned
RaboDirect Business Notice Saver
Be smart about your business spending by limit access to cash.
2.10% 2.10% 0.00% $0 $0 / $0 Open More
AMP Bank Business Saver Account
Ongoing, variable 2.05% p.a. when you link to a transaction account in the same name. Available on the entire balance.
2.05% 2.05% 0.00% $0 $0 / $0 More
ME Business Online Savings Account
Earn a competitive interest rate on your business savings.
1.75% 1.75% 0.00% $0 $0 / $0 More
ING DIRECT Business Optimiser
Introductory rate of 2.50% p.a. for 6 months, reverting to a rate of 1.60% p.a. Available on balances below $1,000,000.
2.50% 1.60% 0.90% $0 $0 / $0 More
Westpac Business Cash Reserve
Ongoing, variable 0.70% p.a. when you link to Westpac business transaction account. Available on the entire balance.
0.70% 0.70% 0.00% $0 $10,000 / $0 More
1.65% 1.65% 0.00% $0 $0 / $0 More
Commonwealth Bank Business Online Saver
Ongoing, variable 0.95% p.a. when you link to Commonwealth Bank Premium Business Cheque Account or Business Transaction Account.
0.95% 0.95% 0.00% $0 $10,000 / $0 More

What are the types of business banking fees?

Before you can find out how to avoid business banking fees, it’s first important to take a look at some of the most common fees that banks are imposing on their business customers. These include:

  • Account-keeping fees

Although there are accounts available that don’t charge any monthly fees, many business banking accounts include a monthly service fee.

  • Transaction fees

Your bank may impose a range of fees on different transactions. Fees could apply to ATM withdrawals, over-the-counter deposits and withdrawals, cheques and a range of other transactions.

  • Annual fees

Do you have a business credit card? If so, there’s a good chance that card comes with an annual fee.

  • Loan fees

If you take out a business loan you may have to pay application and establishment fees, ongoing fees and discharge fees.

  • International transfer fees

Banks usually impose high transaction fees when you want to send an international money transfer to a supplier or client overseas.

  • ATM fees

If you use a business keycard to withdraw money from an ATM that is not part of your bank’s network, expect to pay a transaction fee of up to $2.50.

  • Other fees

You may also be slugged with penalties in a range of other circumstances, for example, if you fail to maintain a specified minimum balance in your account, or if you fail to deposit a specific amount in a calendar month.

How can I avoid business banking fees?

Want to avoid business banking fees wherever possible? The following tips will help you keep bank fees and charges to a minimum.

  1. Choose an account with no monthly fees

There are plenty of business bank accounts available that do not charge any monthly fees. Examples include Suncorp Bank’s Business Everyday Account and the NAB Business Everyday Account.

However, it’s important to point out that these types of accounts will only waive your monthly fee if you meet certain terms and conditions, for example, depositing a certain amount each month or maintaining a minimum balance at all times. These accounts can provide you with an easy way to avoid ongoing fees, as long as you always remember to satisfy the relevant criteria. If you don’t, you’ll end up paying a fee each and every month.

  1. Be aware of minimum balance and deposit requirements

Following on from the above tip, a common and potentially costly trap that many business owners fall into is failing to familiarise themselves with the terms and conditions that apply to their account. For example, your bank may require you to maintain a minimum balance in your account at all times and in return, your monthly fee will be waived. If your balance falls below this level at any time, you will have to pay the account-keeping fee for that month.

Another common condition is that you must deposit at least a specific amount into your business account each month. If you fail to do this, you may be charged a monthly account-keeping fee.

By making sure you’re aware of any terms and conditions that apply to your account, and making sure that you always satisfy those requirements, you can avoid paying unnecessary fees.

  1. Check your transaction limits

There are many business bank accounts that impose limits on the number of fee-free transactions you can perform each month. For example, if you make more than 10 ATM withdrawals in a month, you may need to pay a fee for each subsequent transaction. This may also apply to other types of transactions, such as staff-assisted deposits and withdrawals or international transfers.

Read the fine print to make sure you’re aware of any transaction limits that apply to your account. Shopping around for an account that offers unlimited fee-free transactions online, via ATM, EFTPOS and in a branch is also recommended.

  1. Avoid over-the-counter fees

In today’s world of online and mobile banking, transactions performed in a branch tend to attract higher fees. Typically referred to as over-the-counter transaction fees or staff-assisted transaction fees, these charges can quickly add up to a substantial amount if you regularly like to perform transactions face to face in your local bank branch.

One way to avoid these fees is to do as much of your business banking online as possible. There are plenty of common everyday transactions that can be quickly and easily done via your computer, tablet or smartphone, so it might be worth investigating the benefits of your bank’s Internet banking service.

The other way to avoid these fees is to find an account that charges minimal or no fees for over-the-counter transactions. For example, the St.George Freedom Business Account allows 20 free branch deposits and withdrawals per month.

  1. Avoid credit card fees

One of the biggest expenses with a business credit card is the annual fee. These fees can run to several hundreds of dollars on high-end rewards cards, so it’s definitely worth comparing business credit cards to see if you can find a suitable option with a lower annual fee. Alternatively, choose a card that charges no annual fee at all, such as Commonwealth Bank’s Business Low Rate Credit Card.

There are several other steps you can take to reduce credit card fees, including:

  • Avoiding international transaction fees by not making purchases overseas, and avoiding currency conversion fees by not making purchases in foreign currency
  • Avoiding cash advance fees by not taking cash out using your credit card
  • Avoiding late fees by always paying your credit card bill on time

Finally, if you’re considering adding an additional cardholder to your account and getting an extra card issued, make sure you won’t be charged any fee for doing so.

  1. Avoid overdrafts

Incurring an overdraft fee is a frustrating and costly experience. But if you run short of funds and there’s not enough money in your account to cover a transaction, that’s exactly what could happen, and you could be looking at a sizable fee.

To ensure that this doesn’t happen, get in touch with your bank and ask that it declines any transactions on your debit card if there are insufficient funds in your account. However, remember that this could cause you to incur other fines from third parties if you don’t pay your bills on time.

  1. Linking accounts and services

If you have multiple accounts with the same bank, you could potentially be paying a monthly fee on each of those accounts. Why not ask your bank whether you can link those accounts together and receive a discount on the total monthly fee you pay? Alternatively, see whether reducing the number of accounts you have could be a viable option.

You might also want to investigate whether it’s possible to bundle the features of separate accounts together into one account. For example, could you add a debit card or credit card to an existing account rather than opening a new one and potentially incurring additional fees?

  1. Switch to electronic statements

Do you still receive regular bank account statements in paper form? It’s worth checking whether your bank is charging you for the privilege of receiving paper statements. If so, now is the time to switch to electronic statements, which can be accessed through your Internet banking account.

  1. Use a specialist money transfer service

Does your business regularly send payments to suppliers based overseas? If so, sending international money transfers via your bank can be a very costly exercise. Not only do banks charge high fees on international transfers – fees of $15 to $30 are not uncommon – but they also offer exchange rates that are well below the mid-market rate. This of course can have a significant impact on the cost of sending money overseas.

Instead of using your bank for international transfers, compare the services offered by specialist international transfer companies such as OFX and World First. These companies are experts when it comes to foreign exchange and trade large volumes of foreign currency, which allows them to offer better exchange rates and charge lower fees than the banks. Compare online money transfer providers at finder.com.au to find a better deal.

  1. Choose the right loan

If you need financing to fund future business opportunities, it’s important to compare a range of business loans before choosing just one. In addition to the interest rate and features of each loan, you should also examine the fees that apply. Is there an ongoing fee? What about an application or establishment fee? Will you need to pay a fee to cover the discharge of the loan and are there any other hidden charges you should know about?

By doing your research beforehand, you can prevent any nasty fee surprises down the track.

The latest in saving

Tim Falk

A freelance writer with a passion for the written word, Tim loves helping Australians find the right home loans and savings accounts. When he's not chained to a computer, Tim can usually be found exploring the great outdoors.

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