Choosing the right business checking account is crucial for managing your company's finances effectively. While Bank of America is a well-known option that many businesses consider, it might not always be the best choice given the current financial landscape.
Analyzing Bank of America's Business Checking Accounts
Bank of America offers two primary types of business checking accounts: Business Advantage Fundamentals Banking and Business Advantage Relationship Banking.
Let’s delve into the reasons why these might not be the most advantageous for your business:
1. High Monthly Fees
The Business Advantage Fundamentals account charges a $16 monthly maintenance fee unless you maintain an average balance of over $5,000 or spend at least $250 using your debit card each month. Similarly, the Relationship account requires an average balance of $15,000 to avoid a $29.95 monthly fee. These fees can quickly add up, especially for small businesses that may not consistently meet these balance requirements.
2. Additional Fees
Beyond monthly fees, Bank of America also charges for various banking services that can be essential for business operations:
- Overdraft Fee: $10 per occurrence
- Incoming Domestic Wire Fee: $15
These costs can further diminish the financial efficiency of maintaining a business checking account with them.
3. Lack of Interest Benefits
Unlike some modern banking alternatives, Bank of America’s checking accounts do not offer interest earnings on your balances. Even their business savings accounts offer negligible interest rates, which could be a missed opportunity for businesses to grow their reserves.
Advantages of Online Banking Alternatives
Given the drawbacks of traditional bank accounts like those offered by Bank of America, many businesses are turning to online banks and fintech solutions that offer better terms:
Higher Interest Rates
- BlueVine: Offers a 2% APY on checking balances up to $100,000.
- American Express Business Checking: Provides a 1.3% APY on balances.
- Live Oak Bank: Delivers up to 4% APY on business savings account balances.
Broader ATM Access
- BlueVine: Grants access to over 37,000 MoneyPass ATMs.
- American Express: Allows for withdrawals at 70,000 Allpoint and MoneyPass ATMs.
Cash Deposit Options
While online banks often don't accept cash deposits or might charge for them, they usually provide significantly more ATMs for cash withdrawals. If cash deposits are crucial for your business, consider local credit unions which may offer more favorable terms for such transactions.
Added Features
Some online banks offer additional features without the hefty fees, such as integrated accounting software or tax preparation tools, enhancing the value for business owners.
Conclusion
While Bank of America has been a staple in the business banking community for years, the evolving financial landscape and the rise of online banking solutions present more flexible and cost-effective options for today's businesses.
If you are evaluating banking options, consider what features and fees align best with your business needs before committing to a service that might not be the most beneficial for your financial growth.
For more credit card reviews, check out our articles below:
- Best 1st Business Credit Card 2024
- Bluevine Business Checking Account Review 2024
- American Express Business Gold Review 2024
- American Express Blue Business Plus Review 2024
- American Express Business Checking Account 2024
Frequently Asked Questions (FAQs)
What are the main drawbacks of Bank of America's business checking accounts?
Bank of America's business checking accounts, such as Business Advantage Fundamentals and Business Advantage Relationship Banking, have high monthly fees that can add up quickly, especially for small businesses that may not consistently meet the required balance thresholds. Additionally, these accounts come with extra fees for services like overdrafts and incoming domestic wires, which can further reduce financial efficiency.
How do the monthly fees for Bank of America's business checking accounts work?
The Business Advantage Fundamentals account charges a $16 monthly fee unless you maintain an average balance of over $5,000 or spend at least $250 with your debit card each month. The Business Advantage Relationship account requires a higher average balance of $15,000 to avoid a $29.95 monthly fee.
Does Bank of America offer interest on business checking account balances?
No, Bank of America's business checking accounts do not offer interest on balances, which could be a missed opportunity for businesses to grow their reserves compared to some modern banking alternatives that provide interest earnings.
What are some better alternatives to Bank of America's business checking accounts?
Online banks like Bluevine and American Express Business Checking offer more attractive terms, such as higher interest rates on balances, broader ATM access, and fewer fees. For example, Bluevine offers a 2% APY on balances up to $100,000, and American Express provides a 1.3% APY on checking balances.
What additional features do online banking alternatives offer that might be beneficial for businesses?
Online banks often include extra features without hefty fees, such as integrated accounting software or tax preparation tools. These added services can enhance the value for business owners by simplifying financial management and reducing operational costs.