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The coercive tyranny of checking account fees and why your bank’s mission matters

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Fees exist to guide your behavior and of all institutions, banks are notorious for using (and sometimes abusing) them. 

Checking account overdraft fees warn against overspending. Minimum balance fees, not to take out. ATM fees, not to use competitors’ machines. Interest and rewards are the opposite, but can be equally taxing. Some credit card points programs are so delightfully addictive that 31% of Americans play the game (read: spend the time) without ever cashing in.

These forces constitute an ambient, unproductive coercion, and a serious tax on your attention. As an entrepreneur, you don’t need the invisible hand of a big bank nudging you, and monthly fees chip away at more than your business checking account balance. They eat up your precious entrepreneurial mindshare. 

This is your brain on bank fees

Studies find that judges are more lenient in the afternoon. Impulse purchases and junk food binge-eating tend to happen at night. Our reaction times are worst after dusk. Something happens to our brains over the course of the day that makes us sloppy deciders, and it’s the act of having to decide over and over. 

Your brain is like a muscle. It has a fixed cumulative capacity to decide and if you think of it like a bank account, it’s drained every day by an estimated 35,000 decisions, reports the Wall Street Journal. When tired, it gets careless and looks for heuristics, or mental shortcuts. That’s a special problem for entrepreneurs, whose primary occupation is making decisions.

“Deciding everything from which pair of socks to wear to which candidate to hire is cumulatively exhausting” writes Deep Patel in Inc. “This may cause you to become reckless in your decision making, or impulsive.” Small bank fees can help tip you toward making snap decisions on candidates, missing all-important decimals in your code, or worse: Accepting financing terms that a well-rested you would never.

Those small distractors occur more than you think, and they’re often disguised as a game that leaves you feeling like you’re being thrifty. For instance:

Juggling multiple credit cards and debit cards

One card offers perks on office supplies. Another, on gas. A third, on travel. Are you beating the man by juggling all three? What you trade for maximalism you pay in mindshare. Three logins, three web interfaces, and three payments to remember each month are a cognitive drain and they may save you less than you think. At an extra 1-2% more rewards on a $35,000 yearly spend (the average across all cards in the U.S. according to Creditcards.com) is a mere hundreds of dollars at the cost of dozens of productive hours.

Maintaining many bank accounts and debit cards

Sometimes you’re forced into bank sprawl. Your bank won’t give you a card without personal collateral and so you spread your financial services across several institutions with different password conventions and are forced to endure unending password resets and in-network ATM hunts.

Jumping through hoops to avoid a $10 bank fee

Most of us are prone to a behavior known as irrational loss aversion. We’ll make a bigger effort to avoid pain than we will to seek out gain. Nowhere is this clearer than in small fees. Entrepreneurs worth millions still sweat $10 monthly maintenance fees because because they’ve been shoehorned into a banking system designed for consumers and full of coercive rules. Chief among those:

  • Monthly maintenance fees
  • Minimum daily balance fees
  • Overdraft fees
  • Late fees
  • Excessive withdrawal fees
  • ACH and wire transfer fees
  • Paper statement fees
  • Deposit check fees
  • Out of network ATM fees

This list goes on.

And here’s the crux. A financial advisor would tell you to yes, sweat the small stuff. A single percentage point can be worth half a million dollars over one’s lifetime. But your business  doesn’t have a lifetime. Most entrepreneurs are on a runway of 12-18 months. Bank fees—and the cognitive load they foist on you—are not worth your precious time. They’re worth your accountant’s time, when you get to that point.

Plus, you can just say no to bank fees altogether.

How to avoid bank fees on your startup checking account

The ambient stress of bad banking isn’t always apparent until suddenly, it isn’t. Brex offers a product that’s like startup checking account with no fees called Cash, and it’s coercion free thanks to its mission. Brex is rebuilding financial products free of the constraints of legacy systems (the term “wiring money,” and the associated fees, are from the days of the telegraph) to help entrepreneurs grow. Not nudge them.

Here’s what entrepreneurs say.

“I love how it connects with card and auto-setup to pay from the Cash account. Having Cash and Card in the same place is so convenient, and having a single account instead of a checking account and savings account just makes more sense.” - Anonymous

“Now everything coming in and out of your bank is also synced and managed. I imagine a world where at scale, if I’m in the Brex ecosystem, I don’t have to do bookkeeping at all. Everything is seamless. Cash is a step towards that future state.” -Anonymous

“Brex provides me with the peace of mind of managing my company and employee's expenses through a beautiful and intuitive UI. The rewards program is the best in the market and caters its cash back to expenses that are actually relevant to startup companies (like online software, ride hailing, etc.).” -Alon Grinshpoon, echoAR.xyz

Rather than punish entrepreneurs for running payroll, making transactions, or sending wire transfers, Brex Cash counts those payments toward a generous cash back rewards program. Rather than charging account maintenance fees or minimum balance requirement fees, it gives you full, unfettered access to your money. It prioritizes entrepreneur convenience by focusing on online banking and mobile banking through a mobile app, and it offers small businesses interest rates that are unheard of: rather than the typical 0.01%., thanks to an innovative use of money market funds. 

Brex Cash is designed to help business owners spend their time how they know best. No more quibbling over transaction fees, slouching to a branch to open each new account, or putting up personal capital just to get a restricted Visa debit card. No worrying about whether you've got overdraft protection enabled, fretting about monthly service fees, or sweating using another bank's ATM. And certainly no more blocking out time to handle the bill pay by hand or run direct deposits or relying on the strength of your personal finances to build credit for your business. Cash makes banking worry-free so entrepreneurs can startup better.

Curious what a fee-free world feels like? Learn more about Brex Cash.

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©2020 Brex Inc. “Brex” and the Brex logo are registered trademarks.The Brex Mastercard® Corporate Credit Card is issued by Emigrant Bank, Member FDIC. Terms and conditions apply. See the Brex Platform Agreement for details.Brex Inc. provides a corporate card. Brex Treasury LLC is an affiliated SEC-registered broker-dealer and member of FINRA and SIPC that provides Brex Cash, a program that allows customers to sweep uninvested cash balances into certain money market mutual funds or FDIC-insured program bank accounts. Investing in securities products involves risk, including possible loss of principal. Neither Brex Inc. nor any of its affiliates is a bank. Please see brex.com/cash for important legal disclosures.