Business Banking Fees: Why Banks Limit Transactions

Business checking account fees are part of life for most small business owners, but that doesn’t mean you have to accept whatever is thrown your way. There are ways to lower the cost, granted you know what you’re being charged for.

“There are many different types of fees that come with some business checking accounts,” Herman Man, chief product officer at BlueVine, told “When you first start looking around, you realize everything that can be charged in some cases is.”

If you aren’t careful, business checking fees can eat away at your bottom line and negatively impact cash flow. That’s why it pays to do your homework before shopping for a business checking account.

Do business checking accounts charge fees?

Business checking accounts are more nuanced than individual checking accounts. They tend to face more limitations and incur more fees than consumer accounts.

The fees business owners face run the gamut from monthly maintenance to insufficient funds charges. There are also limitations on the number of transactions a business owner can engage in each month. If you exceed it, you’re hit with additional fees.

Banks do provide ways to get out of the monthly fee – if you maintain a specific account balance or charge a certain amount on the bank’s credit or debit card.

“It’s common for business checking accounts to have fees for services like wire transfers, large numbers of cash deposits, transactions, or monthly service fees,” said Michelle Wright, group sales executive at Capital One. “That said, many banks offer easy ways to avoid these fees.”

There is also a handful of online banks that waive all or most of the fees the traditional banks charge. You give up the human touch with this route, however.

What are the types of business checking fees?

The business checking fees you’re on the hook for depend on the individual bank’s terms. As a starting point, though, look out for these common fees:

  • Monthly service fee: This is a fee you’re charged monthly to cover the maintenance of your business checking account. It can be $8 to $30 a month. If you meet a certain balance requirement or spend over a specific amount each month on the bank’s debit or credit card, this fee is often waived. Some online banks don’t charge a monthly fee for their business checking accounts.
  • Transaction limits: Some banks charge business customers a fee for any transactions over a certain limit. The limitations don’t end with the number of transactions; some banks require a minimum balance, and some charge a fee if a cash deposit is more than a set dollar amount. Most banks have a limit of 200 transactions per month on their business checking accounts. Some of the no-fee business checking accounts don’t place limitations on the number of transactions per month. On the other hand, some allow an even lower number of transactions – roughly 100 – before you incur this fee.
  • Cash deposit fee: Banks set limits on the amount of cash you can deposit each month. If you exceed that amount, they charge you for deposits, usually per $100 deposited above the limit. If you’re a cash-heavy business, weigh this fee when shopping for a business checking account.
  • Non-sufficient funds fee: The bank charges you this fee when your checking account doesn’t have enough money in it to cover a transaction. The average NSF fee is around $35 per transaction.
  • Wire transfer fees: This is the cost to send money from one bank to another. It ranges from $15 to $25, depending on the bank.

How do you avoid business checking fees?

Not all business checking account fees are etched in stone. You can use some strategies to avoid many of them. If it’s a traditional bank, meeting the balance requirement will typically remove the monthly service fee. The same goes for the transaction fee: If you stay within your limit, you won’t face extra charges. That strategy also applies to online banks that set limits on the number of transactions.

Your banking needs will determine the best type of account for you, which means you’ll need to know how money comes in and out of your business.

“As a small business owner, it’s important to have a sense of how much money you expect to move through your accounts on a regular basis,” Wright said. “That way, you’ll be able to choose an account that works best for you. If you’re not running a lot of transactions through your business checking account, it may make more sense to choose a basic account, which usually comes with a lower monthly service fee.”

What are free business checking account options?

A popular way to avoid business checking account fees is using an online bank or financial technology startup’s platform. Fintech startups have been disrupting all aspects of finances for several years now, and that includes business checking accounts. Aiming to serve the small business community, these fintech companies are slashing fees, lowering requirements, and leveling the playing field for our nation’s entrepreneurs. They may not have the deep pockets, extensive relationships, or wide array of services that traditional banks have, but they are applying automation and machine learning to slash costs and improve customer service.

These online banks may not appeal to all businesses – after all, they offer no local branches or human interaction – but they are racking up thousands of customers seeking cheaper alternatives.

“Businesses shouldn’t pay to open a business checking account,” said Kathryn Petralia, co-founder and president of Kabbage. “New online-only products eliminate much of the overhead traditional banking accounts require and therefore pass those savings on to customers by eliminating maintenance fees, minimum balance fees, and similar costs. Find a product that supports your growth, not hinders it.” [In the market for a business loan to boost your growth? Check out the lenders we recommend first.]

With that in mind, here’s a list of the more popular free business checking accounts in the market and what they offer.

  • BlueVine offers a business checking account with no monthly, NSF, or incoming wire fees. Customers earn 1% interest on their balance up to $100,000. BlueVine doesn’t have any limits on transactions or a minimum balance requirement.
  • Novo offers a business checking account that only charges an NSF fee of $27. Outside of that and a $50 starting balance, there are no fees when you bank with Novo.
  • Axos Bank doesn’t charge a monthly maintenance fee, and it offers access to a surcharge-free ATM network and up to 200 free transactions per month. Each transaction after that costs 30 cents per item. Axos Bank requires a $1,000 minimum opening deposit.
  • NBKC Bank has no minimum balance requirement, per-item fees, or NSF fees. The bank charges $5 to send a domestic wire anywhere in the U.S. and $45 to send or receive international wire transfers.

At the end of the day, traditional banks and online banks both have their advantages and drawbacks, so it’s up to you to choose which is better for your business checking account. Either way, it’s important to do your homework, especially on fees, before settling on a business banking partner.

“Some people appreciate the in-person relationship with banks, which has become more difficult during the pandemic,” Petralia said. “Other business checking accounts are optimized for efficiency online, reducing costs and increasing yields. Every business is different, and preferences vary. But the banking options in 2021 are far different than they were even two or three years ago – I’d encourage all businesses to get to know their options.”