How to reduce your small business bank charges in 2025

One of the most frustrating things you’ll come up against as a small business owner are bank charges.

Unlike personal banking – where fees are often limited to overdrafts – most business bank accounts come with a monthly fee and additional charges. Whether your business is doing well or not, the charges seem to keep coming. You may be penalised for paying in too much, or dipping into the red during leaner months.

Check out our latest business bank charges comparison table on our banking section home page!

Understand how business bank charges work

Business bank accounts typically charge fees for:

• Monthly account maintenance (e.g. £5–£12/month)
• Electronic payments in/out over a certain limit
• Paying in or withdrawing cash
• Receiving bounced cheques
• Overdraft usage or unpaid items

Some traditional banks also charge for paper statements or in-branch services. Knowing what you’re being charged for is the first step in reducing unnecessary fees.

Get a free business bank account

Many banks offer free business banking for 12–30 months to new customers. But always read the small print – some “free” deals limit the number of electronic transactions or monthly cash deposits. For example, you might be capped at £3,000/month in cash deposits or 100 online payments.

Several new challenger banks offer free business accounts with fewer restrictions. These include:

• Tide – No monthly fees, 24/7 app access, and fast setup – £50 cashback
• Starling Bank – Free UK transfers, no monthly fees, great mobile interface
• Monzo Business – Integrated invoicing and budgeting, paid and free plans

Be sure to compare features, as some exclude cheque handling or international payments.

Know your account’s terms and conditions

No one likes reading the fine print, but understanding your account’s limits will help you avoid unexpected charges. Look for:

• How many transactions are included for free
• Limits on cash deposits or ATM usage
• Fees for CHAPS, BACS, or international transfers

Knowing where the charges apply makes it easier to adapt your banking habits accordingly.

Use an online-only account if it suits your business

Online business banking is often cheaper and more convenient. Many banks offer discounts or free plans if you opt out of paper statements or branch services.

If you rarely deal with cash or cheques, switching to a digital-only bank could save you hundreds over the year.

Check your account daily and review every statement

It sounds simple, but many small business owners skip this. Get into the habit of checking your balance each day – especially if you’re close to your limits. Early awareness can help you avoid unplanned overdraft charges or rejected payments.

When you receive your statement, go through it line-by-line. Challenge anything you don’t recognise. Banks do make mistakes, and those errors could cost you.

Automate your payments

Automated payments such as standing orders and scheduled bank transfers reduce the risk of late fees. If you know when invoices are due, you can set up payments in advance to avoid interest or charges from suppliers.

Most online banking apps allow you to manage future payments quickly and easily.

Watch out for bounced cheques

Although cheques are used less often, a bounced cheque from a client can lead to bank charges – and you’re still out of pocket. If you still accept cheques, consider phasing them out. Encourage customers to use secure online payment methods instead.

Reduce the amount of cash you pay in

Depositing large amounts of cash can be expensive for banks – and they’ll pass that cost on to you. Try to minimise cash where possible by:

• Encouraging clients to pay electronically
• Offering small discounts for faster card payments
• Using contactless or mobile payment systems for retail

If you do need to pay in cash, try to do so in larger, less frequent batches to reduce handling fees.

Negotiate better terms with your bank

Don’t assume you have to accept the fees you’re given. If you’ve been a loyal customer or have a growing turnover, you may have room to negotiate:

• Ask about lower fees or free add-ons
• Take a competitor’s deal leaflet to a bank meeting
• Request a dedicated business manager

It’s often cheaper for a bank to retain your custom than attract a new business. So if you don’t ask, you don’t get.

You could also consider opening a business savings account to earn interest on surplus funds. Some 2025 accounts offer up to 4–5% on fixed-term deposits.

Consider switching banks entirely

If your current bank isn’t cutting it, consider switching. Thanks to the Current Account Switch Guarantee, switching is now quicker and easier than ever.

All your payments and direct debits will be moved automatically, and your old account will close after the transfer completes.

Complain if charges are unfair

If you feel you’ve been charged unfairly, contact your bank and raise a formal complaint. If they don’t resolve the issue, escalate it to the Financial Ombudsman.

Letting your bank know you plan to do this may prompt them to settle quickly, especially if the amount is small.

Common banking mistakes to avoid

• Paying for features you don’t use – Many business accounts bundle in services like international payments, in-branch support, or multi-user access. If you’re not using them, you’re likely overpaying. Review your account at least once a year to see if a simpler, cheaper alternative would do the job.
• Letting small charges go unchecked – 50p here, £1.20 there – it might not sound like much, but those micro-charges can snowball over the course of a year. Check your monthly statements and query anything you don’t recognise. Many businesses miss hundreds of pounds in avoidable fees each year simply by not paying attention.
• Mixing personal and business funds – Using your personal account for business transactions (or vice versa) can lead to confusion, accounting errors, and problems with HMRC. Always use a separate business account and keep records tidy from day one.
• Failing to plan for cash flow dips – Overdrafts and bounced payment fees are expensive. By forecasting your cash flow (especially for slow months or late-paying clients), you can stay one step ahead and avoid dipping into the red unnecessarily.
• Assuming loyalty gets you a better deal – Banks rarely reward long-standing customers unless you ask. Don’t stay put out of habit – compare your account annually and don’t be afraid to negotiate or move to a more competitive provider.
• Relying on outdated payment methods – Still accepting cheques or cash only? You could be paying more in bank handling fees – and losing business. Moving to online or card payments could save you time and money, and make life easier for your customers.