Bank Advice

This is a note for small businesses that deposit a lot of cash and small checks, perhaps from a retail operation.  We have found that the fees of the large banks are simply awful for retail deposit accounts.  Bank of America, Wells Fargo, US Bank, and Zions are all fairly large banks who have raised fees as high as $100+ a month just for a checking account into which we make a weekly deposit of cash and small checks. In particular, US Bank has taken over two of our small deposit banks recently, and raised our fee from $7 on one account to over $120 last month.

Even if your main banking relationship is with someone else, look for a small local bank or credit union for deposit accounts.  I have a number of such small banks around the country that charge us zero a month for our deposit account, and at worst up to $10.  Anything more, and you can probably do better.


  1. MingoV:

    The large banks have lost much revenue because large businesses aren't borrowing. They are earning little interest on their holdings, so they make up the revenue shortfalls with huge fee increases.

    One interesting counter-point: Bank of America offers free "ebanking" accounts with no minimum balance for customers who do only electronic (online, ATM, and telephone) banking. BoA promotes this as a banking choice for college students. Too bad that BoA isn't reaching out to small businesses in the same manner.

  2. a_random_guy:

    I don't get this, but I can only confirm that it is true. The big banks have essentially no interest in small businesses as customers. Huge fees, lousy customer reps. When we were still with a large bank, every time we needed to discuss something with our customer service rep, it was a different person. Dealing with small businesses was apparently the thing that new employees were saddled with until they proved they were actually competent.

    What finally made us move on was the time we needed to buy a piece of real estate to expand. We were going to take out a mortgage, so the bank asked us to send a business plan, etc.. We sent it all in, and a few days later we got a letter simply saying "no". Call up, ask for an explanation? No one had an explanation, no one wanted to be responsible for having made the decision. I physically went to the bank, and asked to speak to our rep. I was refused; literally turned away, despite the fact that we had been running our business through their bank for many years.

    We closed our accounts immediately and went to a local bank that was ecstatic to have our business (and to give us the mortgage).

  3. Robert Sykes:

    Several years ago, some economist reported that unless you were a small mom and pop operation the most expensive way to do business was cash. The reason being all the time and people needed to count it, transfer it, monitor it, etc. You have the cashier, the local manager, the armored car company and the bank teller. All have to count and certify the cash. The bank is only part of this chain.

    The next most expensive way was checks. Again, the cause is the large number of people handling them. And its not just the banks. Again, the cashier at the store or the mail-in collection office, the physical transfer operation and the bank.
    Credit cards, despite the fees, are cheaper than checks, but there are still people involved when people mail in their monthly payments. And they have to be paid. The main reason that credit cards are cheaper than checks is that fewer people are involved in the funds transfer process.
    Debit cards were the cheapest way to do business. This is because payment is direct electronic transfer between accounts: personal checking account to corporate receipts.

    So, stop whining about the banks and figure out how to get rid of all the money/paper handlers.

  4. a_random_guy:

    @Robert: Life isn't like that. Almost any small retail-oriented business will have people paying in all sorts of ways. If a customer wants to pay cash, what are you going to do? Not sell to them? Checks are the worst, because you have no idea if they are valid. Bounced checks create a massive amount of work, as you try to contact the customer, try to get them to pay, they write the next rubber check, etc.

    Credit cards are also pretty horrible, and not only because of the costs. Here's one example: as a business that also does mail order, we have customers who send us their credit card numbers by fax, by email, by scribbling them on random bits of paper and mailing them, heck, probably we'll get one someday by carrier pigeon. If we get a CC-number by email, it means that we suddenly have it on our computers. If we *ever* have CC-numbers on our computers, we are supposed to subject our entire computer network to a full-scale audit and intrusion test by a certified security company every couple of months, at our own expense. We would also have to pay to have the audit company do a full-up intrusion test of our ISP (because that's where our email sits until we read it); you can imagine the chances of the ISP putting up with that. Utter insanity, totally unrealistic, but that's just one of the gems buried in the in the T-and-C for mail-order merchants.

    This is typical of big banks (which is what the credit card companies really are). They are too big to care about the little guys, and they know you cannot afford not to accept credit cards. So they can write down whatever conditions they want, charge whatever fees they want, and the little merchants just have to suck it up.

    True debit cards are, of course, the best. The big banks hate them, because they can't skim (as much) off of every transaction their customers make, and they have no basis for charging the merchants anything at all. That's why they prefer to disguise debit cards as credit-cards: As soon as a card carries the Mastercard or Visa logo, and transactions are handled under the credit card system, the fees start rolling in...

  5. mark2:

    Newer systems scan the checks and the checks are processed automatically. Businesses have had the ability to use such a system for many years. Now Banks are using phone apps to let even regular non-business folk to scan your check in, rip it up - and they process the digital image automatically again.
    I think years ago checks were more expensive for businesses, but I think if costs are still high, it is merely because of the bank gouging.
    The big cost for businesses with checks is the bounce. You don't get your money and the Bank loves you for all the bounce fees they get to collect.
    Take a look at the bank copies of your checks, you will notice, unless you wrote one out to a person - they are all digital repestentations of the actual check with some note: Actual check on file with retailer.

  6. mark2:

    Large banks are mean to everyone, and in some areas even the Credit unions aren't pleasant. What I don't understand is why most folks put up with the bad service and all the stupid fees. You would think they would have switched years ago.
    Bank tip - banks are not allowed to charge you overdraft fees on your bank accounts unless you let them! This was a feature in the banking reform that was done recently with Credit cards and Checking accounts. Banks are sending everyone notices now, saying sign here, and we will automatically transfer money from your savings account / line of credit for a $25 fee. This is the loophole.
    Don't sign the papers and you can do minor overdrafts without the fee.

  7. mark2:

    Banks make plenty of money. The Federal Reserve gives them money for free, and the banks are told to invest it in US Treasuries, or place it in the Fed Reserve account. Local regulators actually prevent banks from making more risky loans. The government set up this system because they can
    A: Get banks to finance the massive debt.
    B: Politicans can complain that it is all the banks fault that there is no lending.