The Secret to a Free Business Checking Account Revealed
Free checking accounts seem to be increasingly popular today, as more people are becoming conscious of their spending habits. Free is free! What better way to save than to not spend?
Small businesses are no different: Always looking for ways to save money.
What does a free checking account actually mean? Is there even such a thing as a “free checking account?”
What is a free business checking account?
When we see the word free, we think absolutely no cost, no money exchanged—right? Who doesn’t love free things? When it comes to free checking, there are very few totally free checking accounts out there.
Typically, a brick-and-mortar bank will offer a “free checking account” to entice new customers to sign up with their bank. The downside is banks need to make money, and to do so, they need to add fees to features of their bank accounts. Banks generally attach fees to:
- ATM transactions
- Minimum balance restrictions
- Check transaction limits
- Overdraft or insufficient funds
- ACH transactions over a certain quantity
- Direct deposits
While many banks will advertise that they will supply free checks, the additional fees associated with the features listed above effectively make the checking account not really free. Today, very few brick-and-mortar banks offer totally free checking with no monthly maintenance or direct deposit fees and no minimum balance requirements.
Where are the actual free checking accounts for businesses?
Internet or digital banking is becoming a popular choice for small businesses. Kabbage Checking is one prime example of a free checking service. When looking for a bank to open a checking account, you typically look for specific features that will complement your business needs. Kabbage Checking offers the following services, which are comparable to other banks’ offerings.
- Free ATM access to thousands of in-network ATMs nationwide. You never have to worry about not having access to your funds.
- Online bill pay. You can set up your payment vendors, organize your bills and issue payments directly from your checking account.
- Temporary virtual debit card. As soon as you sign up for a Kabbage Checking account, you have instant access to your funds. No need to wait on your debit card or rely on checks. You’re issued a temporary debit card number to use to pay bills online and make online purchases until your debit card arrives. Once your plastic card is activated, the temporary virtual debit number is deactivated.
- Reserves. Reserves are sub-accounts that you can use to organize your money for specific savings goals. Currently, account holders can have up to five unique Reserves to manage their cash flow.
- 24/7 access to your checking account
- No monthly fees. There are no set-up fees, no monthly maintenance fees and no minimum balance requirements to open a checking account with Kabbage.
- Competitive interest rates. All funds in your Kabbage Checking account, including balances in Reserves, currently earn a variable interest rate of 1.10% APY.
The bottom line: free checking accounts still exist and many online banks are following through with their promises. Kabbage has partnered with Green Dot Bank to create a full-service checking account for small businesses with a 1.10% APY interest rate alongside many free features.
Free Checking Features
If you are looking to get a great deal on a free checking account, look for as many of these features as you can:
- No minimum balance requirements
- Free debit card
- No charge for ACH transactions
- No charge for direct deposits
- Free online access to your account
- Unlimited use of checks
- Free online bill pay
- No ATM fees
Free Checking Drawbacks
When you find a free checking account, pay attention to the features you may not get with your account. Most free checking accounts do not offer interest on deposited money. Also, many free checking accounts through a traditional bank do not offer images of your checks, which are helpful for recordkeeping. Generally, stop payments and canceled check returns are not included in free checking accounts. However, this service is very rarely used. If you feel that you need this, you may find that you’d rather pay for stop payments or canceled checks as needed, than worry about it as a selling point differentiator.
Remember, free does not always mean free. Make sure to read the fine print and understand all of the features of a free checking account. While many checking accounts offer free services, there may be fees associated with specific services.