How To Avoid Bank Fees
 By Alex R. Merriman

As a small-business owner you can negotiate killer deals with suppliers and save a bundle of cash. You can estimate and bid on jobs that provide you with a tidy profit.

So why would you let money slip away by paying banking fees that you can easily avoid?

Bank fees can range from a few bucks a month for ATM usage to much more for business owners that consistently overdraw their accounts.

Save your dough. Follow these guidelines to avoid bank fees.

Know What You Need
Different types of small businesses need different types of services and products from banks. Understanding what you need from a bank can help you reduce the fees you pay.

For example, perhaps you travel on business – a lot. And perhaps during those travels, you hit up ATMs for cash. In that case, look for a bank with an expansive ATM network, one that doesn’t ding you for fees every time you tap an out-of-town ATM for spending cash.

Or maybe most of your customers pay for your services and products with a credit card. For you, finding a bank with reasonable fees for merchant credit card processing could be at the top of your needs list.

Make a list of how your small business uses bank services and products. Look back over old bank statements to see where you’re incurring bank fees – and how much you’re spending on those fees.

Start looking for ways to reduce those fees. Call your banker for ideas. Changing the type of business checking account you have might reduce fees. If your bank can’t help you save money on fees, perhaps it’s time to find a different bank that better meets your needs.

Shop For A Bank
If you decide to shop for bank with lower or no fees, read the fine print.

Some banks will offer initial deals or will low ball initial fees just to get your business. The deal may be good for a year or less. But when the honeymoon is over, you could find yourself facing higher fees.

Read all of the paperwork. Ask questions and take notes. Find out if and when fees change. Request a rate sheet that details every type of fee the bank charges.

Maintain Your Minimum Balance
Some business banking accounts waive monthly fees if you maintain a minimum balance. Generally, the minimum ranges from about $1,500 up. Drop below that amount by just one penny and the bank will take its monthly fee. Those fees start at about $10 and go up from there.

If you’re not sure about the amount of the minimum required in your account, call the bank and find out. Then take steps to maintain that minimum.

Watch Overdraft Fees
If you over draw your account with bounced checks or over-the-limit debit transactions, the fees can cost you a bundle -- $25, $30 or more per overdraft.

Keep track of your account balances so you don’t over draw. Most banks offer free online access to your business accounts so you can verify balances and up-to-date transactions. Use the service to help you avoid overdrafts.

Writer Fewer Checks
You can find many business bank accounts that are free – if you write a limited number of checks. But if you go over the set number of checks per month, and the bank reserves the right to switch your free account to one that charges a monthly fee.

The number of checks you can write on a free account varies by bank. Some set the limit at 200 or less; others at 400 or less.

Maybe that number wasn’t an issue when you first opened your bank account. But small businesses grow, and so could the number of checks they write.

Review your bank account agreement. Know your check-writing limit. Stick to it if you want to avoid bank fees.

(Posted October 2006)

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