Do you understand your business bank account? If you have a business bank account you need to please read this or stand to lose money. This is one of the reasons why it is important to have a business coach.
I was just on the phone with an account manager from a major bank so that I could open another bank account. I was totally blown away by the person’s lack of understanding of how banking works as well as how the bank may be treating thousands of people unfairly, which is totally against the FSA guidelines.
Here is what happened in a nutshell. The business bank account, cheque account, has a monthly charge, which you would expect. There is no interest payable to me for any credit I have in the account. So far so good. The account manager proceeds to tell me that they also give me 2 additional accounts for free. A savings account to keep my savings separate, which receives no interest. As well as a Call account to keep my money separate, which receives between 1% – 3% interest on funds in the account. Everything is clear so far right? Here is where it goes haywire.
My question to the account manager is, “Why would I want to put my surplus cash into my savings account that pays no interest when I can receive up to 3% interest on the Call account? After all, both accounts are free and they both give me instant access to my funds.” The only difference is that the Call account has a minimum balance requirement of R1000.
So I say to him that it is crazy to have both these extra accounts if only one pays you interest. How many unsuspecting business owners have their spare cash in the savings account, thinking that they are receiving some interest? This confuses many clients and is in fact not treating them fairly. The bank takes the cash in your savings account and loans it out to make interest off other people and then not pay you any interest on using your money.
His Response is amazing.
“The bank can’t loan out your money in your account as it is your money. If you needed access to it, then it would need to be in your account.” Have you ever heard such a stupid thing in your life? Do you understand that there is not enough money in the world to give to every person who has savings? The banking system works on digits and number in a computer and your money does not lie nicely in a little box in ten’s and twenties marked with your name. When you draw money from the bank it is not the same notes you happened to put in a little box which has been kept for you. The bank loans money and charges interest. That is one of the ways they make money. He believes that this is not how the bank operates.
What business bank account do you have?
If you have business bank accounts, or any bank account for that matter, check if you are in an account that pays you interest. Let the interest that you gain from that account help to offset the bank charges that you incur. Otherwise you are actually paying the bank twice. Once in bank charges, then again when they take the interest that should be due to you and keep it for themselves.
Please be more aware of your finances. Maximize your earnings and minimize your expenses. If you need help to understand this, speak to a financial adviser or a business coach to assist you in ensuring your money works for you.
For more information or to speak to us, please feel free to contact us today.