Ready to break up with your big bank? See what you should be avoiding in your business checking account
If I'm being honest, this is a little embarrassing to admit, but I finally ended things with Chase. (Chase...bank, that is).
I'm not one to talk $hit after breakups, but I know I'm not the only one out there that put up with all the red flags of my bank for way too long.
Red Flag #1: Account Minimums
It's common for banks to require an account minimum to avoid paying a service fee. Your business account is no different, and is likely going to be pricier than you're used to. The daily minimum at Chase for a biz account was $1,500, and is $3,000 at Bank of America at time of writing.
I justified this one for longer than I should have. Having the account minimum (of $1,500) is almost like having a forced savings account. Don't want to pay a service fee? Better keep the minimum in there! Yes, having the digits in your account is nice, but being self-employed has ups and downs, and if it comes to paying the bills or a service fee, guess what gets paid? Freaking BOTH.
Red Flag #2: Service Fees
Keeping the account minimum or jumping through hoops of having direct deposits, 15 monthly transactions and doing an ancient dance under the full moon are ways to avoid the service fees, sure, but can we just NOT?! One way or another, the time will come, and you will be hit with the dreaded service fee.
Let's imagine we are paying the service fee every month, to the tune of $12 at Chase and $14 at Bank of America. That adds up to $144 or $168 a year. I'm sure you can think of a few ways you'd rather spend $168 on your biz.
Red Flag #3: NOT Earning Interest
Unfortunately, interest rates on savings have been low for a long time, so we all got used to not earning anything on our money. Does that make it okay? Does that maintain your purchasing power? Does that protect you from inflation? Nope, nope, nope. While most places currently aren't even keeping up with inflation, earning SOMETHING is better than nothing! A half percent is 50x more than 0%, and 1% is 100x better! This does add up, especially over time.
When it comes to your choice of banking, and you have the option of paying fees for having an account, or earning some interest on that same money... I think making a little $ is obviously the better choice! Especially considering this has a compounding effect, as your account gains interest month after month, year after year.
Find a bank with no minimums, no service fees, and one that pays interest. This is usually easier found by looking at online banking options- rather than the classic brick and mortar, ATM on all corners, traditional bank that we are more used to. These banks have lower overheads, and can afford to offer more competitive rates for your business.
I settled down with Bluevine (not an affiliate) and they are checking my boxes so far. No minimum, no service fee, and they pay 1.00% interest if you have a balance of over $1,000. (See, that's an incentive to keep money in there, not a threat like service fees are. And I think we can all agree, incentives are much nicer).
And when Chase asked my reason for closing? I happily told them these three things. And that no, I don't think staying friends is a good idea.
I hope this was helpful, and that you aren't being taken advantage of by your current bank! If you need help switching, or have any good breakup stories (banks or humans) let's chat!