Director of Cash Management Services, Lead Bank
There are a lot of business checking account options available to you, many of which are free. So what should you consider when evaluating the options? What services should you expect from a free business checking account? How can you determine if your business is eligible for a free business checking account?
First off, many free checking accounts are free if you maintain a monthly account balance, if you limit the number of transactions within the month, or use your debit card so many times within the month.
Below are the top 5 questions to ask yourself when searching for a new free business checking account.
1. Is your business able to maintain a minimum monthly balance (e.g. $5,000 or $10,000) to waive a particular monthly fee?
2. Will maintaining the minimum monthly balance cause any issues for you – you are essentially locking these funds from being used to waive a fee of $5 - $50? Would you be better off on allowing the balance to drop below the minimum resulting in the fee but saving more elsewhere (guaranteed delivery of a product you need, a late fee from a vendor for not paying on time, disgruntled employees because payroll is delayed, etc.)?
3. How many transactions do you normally have in a month? Are you a heavy check writer? Have you tried to enroll in direct deposits/direct debits as often as possible (minimizing the number of checks you have to write)? Are you using a debit card to make purchases?
4. Are you willing to pay a nominal transaction fee if you go above the monthly transaction volume? Again, in certain circumstances, per transaction fees may be worth paying if it means you can save elsewhere.
5. Does your free business checking account include the following services? Online banking, including business bill payment, debit card, mobile app, mobile deposit and online bank statements?
Determining whether your business is eligible for free business checking may also depend on the type of business you operate. In certain cases not-for-profits, small proprietorships and personal “doing business as” (e.g. Mary Kay or Avon representatives, musicians, etc.) businesses may be eligible for free business checking accounts. Be sure to share this or bring documentation to support when you talk with your banker.
Conducting your research and asking the right questions can help you find the best business checking account for your business. Aligning your priorities and expectations with the different account options will also minimize the fees you pay so that a free business checking account truly is free.
Peter McVey has been in the financial services industry for over 18 years and the Director of Treasury Services at Lead Bank for five years. He graduated from Truman State University with a BA and earned his MBA from Baker University. Peter is an Accredited ACH Professional (AAP) and a National Check Professional (NCP). Additionally, Peter serves in various roles for NACHA, The Electronic Payments Association as he is currently on the NACHA Rules & Operations Committee and the AAP Blue Ribbon Panel.