Business Bank Accounts - Things to Watch Out For
Things to Watch Out For
Banks which offer business accounts are in business to make money, and they do this from the bank accounts they offer in a number of ways.Our guide to business current accounts gives you the lowdown on how the accounts work. But here are the things to look out for when choosing your account.
Standing Charge
Some accounts require a regular standing fee payment either monthly or quarterly. Many accounts do not require a standing charge to be paid.
Bank Charges
Business Bank Accounts attract bank charges for many transactions which involve money going into or out of the account, unpaid cheques, stopped cheques, overseas telegraphic transfers and the like. Make sure you understand what you pay for and how much as these fees could mount up quite heavily.
Charging Period
Your bank will aggregate the charges incurred and charge these to you regularly. This could be monthly or quarterly. You can choose depending on how you like to manage your cash flow.
Interest
Interest rates on business current accounts are usually pretty low, so don't get too excited about these.
If you're after a deposit account, then interest rates are more competitive, but still generally lower than personal accounts.
Overdrafts
Overdrafts are basically a facility to let you overspend, so should be avoided if possible. Make sure you understand the terms of your overdraft facility. There are two sorts of overdraft:
- Approved overdraft - where the bank agrees an amount by which you can go overdrawn.
- Unapproved overdraft - where you either exceed your approved overdraft or go overdrawn without having an approved overdraft.
The interest rate charged on your approved overdraft will be less than an unapproved one and can be negotiated for business accounts. Rates for unapproved overdrafts are often between 25 and 30%, or even at the bank manager's discretion.
If you don't have an overdraft facility its just as important to make sure you have enough money in the account to meet payments, as you may be charged by the bank if a payment cannot be made.
Cash Withdrawals
You may get an ATM card with your account so you can get money out of cash machines. You may get charged for cash withdrawals.
What to do Next
Now you're aware of all the pitfalls, take a look at the
latest business bank account best buys to check the latest rates and
deals on offer.
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