Many small businesses stay with the same bank they chose when they first set up. But switching your business bank account could save your company money. Our guide explains how to negotiate a better business bank account package...
The main reason for switching business bank accounts is to save money. A new business bank account could offer a better interest rate when you’re in credit or lower bank charges when you’re overdrawn. Some banks even offer new business customers free banking for an initial period.
On the other hand, you may want to switch your business bank account because you want new services such as 24-hour telephone or internet banking. And some businesses move their bank accounts because they feel the relationship with their current bank is not working.
Competition between banks, together with more sophisticated internet and telephone banking services, means there’s a wide range of business bank account options to choose from. Your first step is to think about what you want from a business bank account.
Choosing your business bank account: questions to ask
How are the business bank account fees charged?
If you’re likely to have lots of transactions going through your business bank account, it makes sense to pick an account with a fixed fee rather than one that charges a fee per transaction.
Do you need a local branch?
Think about whether you need a bank with a branch local to you or whether most of your transactions can be done by phone or online.
Do you want advice from your bank?
Some businesses prefer a bank that has a dedicated small business adviser to assist them.
What’s the credit interest rate on the business bank account?
If your company tends to have cash in the bank, look for a business bank account with a good rate of interest on credit balances.
What about overdraft rates on the business bank account?
If you’re frequently overdrawn, look for a business bank account deal where the overdraft rate is competitive.
What special business bank account deals are there?
Some banks offer an initial period of free banking if you transfer your business bank account from another bank.
Are there additional business bank account charges?
Check whether there are extra charges – for instance, does the bank charge when it writes to you about an overdraft limit? Does it charge for statements?
Business bank account buyer’s tips
- Automate as many transactions as you can by using direct debits and electronic payments.
- Use your bank’s online services.
- Avoid unauthorised overdrafts.
- Call your current bank and tell them you are thinking of moving banks. See if they are prepared to amend the terms of your account to match those of the new one.