These days, savvy consumers are growing more aware of the many ways banks cheat their customers. Business banking customers need to be especially wary of the potential for abuse. Let’s look at some of the biggest ways banks cheat customers to maximize profit.
1) Overdraft Fees
Overdraft fees are among the most typical ways banks profit from accountholders. Make sure your bank offers protection from occasional overdrafts. At the least, banks should offer email or text alerts if account balance gets low.
2) Maintenance Fees
Although many banks charge maintenance fees, most will waive these fees if your business account balance remains above a certain amount. Ideally, choose an account with no fees. If fees are unavoidable, maintain the minimum balance.
3) Wire Transfers
Except under the most unusual circumstances, money transferred by wire should be available instantly. Long delays are caused by institutional policies, not technical limitations. Before opening an account, contact your prospective bank to ensure transfers will be deposited promptly.
4) ATM Fees
While it’s true banks incur fees when customers access ATMs outside their network, these charges are often exaggerated as a means of profit-taking. Reduce fees by ensuring your bank has a substantial ATM presence in your operating area.
5) Credit Cards With Variable Rates
Entrepreneurs and small business owners are frequently targeted using credit cards with initial low rates that can make balances balloon in the future. Your annual percentage rate with such a card will frequently go up sharply after the first year.
6) Business Credit Cards With Annual Fees
While cards with annual fees are a common way to help consumers build credit, business credit cards should never have these fees. Be alert, since such fees are typically charged only once a year and can slide under the radar if you are not careful.
7) Business Credit Cards With Deceptive Rewards
It is becoming more popular for business credit cards to come bundled with a package of rewards. Understand, however, that the exchange rate between dollars spent and rewards gained is usually fractions of cents on the dollar. Rewards can be used to dress up an unfavorable offer.
8) Aggressive Marketing Practices for Business Customers
Many banks maintain commercial partnerships with a network of businesses around the United States. Examine your account and credit card agreements carefully to ensure you can limit the extent to which your information is provided to these companies. You should also be able to opt out of “partner” advertising.
9) Business Loan Repayment Fees
If you pursue a business loan from your bank, be aware that paying promptly can cost you. When arranging medium-term loans, many banks will tack on fees for paying off the loan before the anticipated end date. The maneuver is solely to protect banks’ bottom line.
10) Limited Access to Crucial Information
Business owners have strict requirements when it comes to tax reporting. These demands can become highly inconvenient when your bank only provides a year’s worth of statements. Most banks charge extra for accessing older information and fulfill such requests at their leisure.
It’s reasonable to be concerned about how your financial institutions treat you. Being proactive about where you keep your money and what kinds of agreements you enter into will help you get the most from your efforts in the business world.
One way small business owners are retaking control over their money is by seeking innovative ways to get the loans they need to grow their companies. For a partner that will work with you to develop the right financing package, contact Advance Funds Network.