Business bank fees you cannot explain: how account analysis and earnings credits work

The short answer: you pay for activity, and balances can pay some of it back

Business checking fees rise because a growing company uses more of the bank: more checks written and deposited, more cash handled, more wires, more ACH files and more services such as positive pay or remote deposit. On larger accounts the bank totals that activity on an account analysis statement each month, then subtracts an earnings credit based on the balance you keep, and you pay the difference. If the fee keeps climbing, the cause is almost always a change in how you bank, a service you no longer need, or an account type that no longer matches your volume.

Much of my work at Frost Bank is managing deposit relationships for small and mid-size companies, and the fee conversation comes up often. It rarely starts with anger about one charge. It usually starts with an owner who has noticed the monthly number drifting up for a year and has no idea which line is doing it.

Three kinds of business checking, and why the right one changes as you grow

Most banks sort business checking into roughly three tiers. A basic account has a monthly service charge that can usually be waived, a set number of paper items included each month and a cap on how much cash you can deposit before extra charges apply. A middle tier raises those allowances and often bundles a few services such as stop payments or a handful of outgoing wires. Above that sits an analyzed account, where every service is priced per item and the balance earns a credit that offsets the charges.

Frost's own business checking page follows that pattern: two flat-fee accounts that differ mainly in included paper items and monthly cash processing, and an analyzed account where, in the bank's words, fees vary based on transaction volume, services used and the earnings credit on balances. Other banks use different names and limits, so read the actual fee schedule rather than the product name. The point is that a company that started on a basic account five years ago may now be paying overage charges every month because it simply outgrew the allowance.

How to read an account analysis statement line by line

If you have an analyzed account, the analysis statement is a separate document from the regular bank statement. Ask for it if you have never seen it. It lists each service, the number of times you used it during the month, the unit price and the total. Below that it shows your average balances, the earnings credit rate applied to them, the credit earned, and the net amount charged to the account.

Go through it with three questions. Which services make up most of the charges? Are you paying for anything nobody in the company uses anymore? And how much of the gross charge did the earnings credit cover? Owners are often surprised to find a lockbox, a reporting module or an extra account they set up years ago and forgot about, still billing every month.

• Service description and volume for each item used
• Unit price and extended charge per service
• Average ledger and collected balances for the period
• Earnings credit rate and total credit earned
• Net service charge after the credit

What the earnings credit is, and what it is not

An earnings credit is a value the bank assigns to the balances you keep in an analyzed account. It is not interest paid to you in cash. It can only be applied against service charges for that period, and in most arrangements any credit beyond your fees does not carry over or get paid out. The rate is set by the bank and can change with the market, which is one reason an identical month of activity can cost you a different amount from one year to the next.

That has a practical consequence. If your balances are large enough that the credit already wipes out your fees, keeping even more in the operating account earns you nothing extra. That excess may be better placed in a savings or money market account, or used to pay down a line of credit. If the credit covers only part of the fees, a modest change in how much you keep in the account, or in which account you keep it, can change the monthly number. Your accountant should weigh in on how much cash the business needs on hand before you move anything.

The usual reasons the number keeps rising

Most fee creep comes from a handful of habits. None of them are wrong on their own; they just cost more than the alternatives once volume grows. Paper is the biggest one. Every check written, every check deposited at a teller and every bag of cash counted is a priced item. Wires are often priced well above ACH for the same payment. And many companies carry more accounts than they need, each with its own maintenance charge.

• Writing and depositing paper checks instead of using ACH and remote deposit
• Sending wires for routine vendor payments that could go by ACH
• Exceeding the cash processing allowance on a flat-fee account
• Paying for treasury modules or extra accounts nobody uses
• Balances that dropped while activity stayed the same
• Staying on an account tier the business outgrew years ago

Changes that genuinely lower the bill

Start with the account type. If you are paying overages every month on a flat-fee account, a higher tier or an analyzed account may cost less overall, and the reverse is true for a company whose volume dropped. Ask the bank to run your last three months of activity against each option. That is a reasonable request, and a bank that is interested in your business should be willing to do it.

Then move routine payments off paper. Paying vendors by ACH and depositing checks by scanner usually costs less per item than the paper alternatives and saves staff time as well. If you want a sense of whether your company is ready for that step, I wrote about the signs a business is ready for treasury management separately. Finally, close the accounts and services you do not use, and look at where your idle cash sits. Balances that are doing nothing in a flat-fee account might either earn a credit in an analyzed account or earn interest in a savings account.

Cash-heavy businesses deserve their own look. Restaurants, retailers and service companies around Dallas that take a lot of cash often pay more for cash processing than for anything else on the statement. Depositing less often in larger amounts, using a smart safe or vault service where the volume justifies it, or simply choosing an account with a higher cash allowance can each make a visible difference. Run the numbers on your own volume before deciding, because the right answer depends on how much cash actually comes through the door each month.

Questions to put to your current bank before you shop around

Moving banks to save on fees is sometimes the right call, but it is work, and the fee you are escaping may be fixable where you are. Before you start comparing offers, ask your current bank for a review. If the answers are vague or nobody can walk you through the analysis statement, that tells you something about the relationship as well. I keep a longer list of questions to ask a bank before moving your accounts for owners who decide to look elsewhere.

• Which account type fits my last three months of activity best?
• What earnings credit rate applies to my balances, and how often does it change?
• Which services am I paying for that show no recent use?
• What would my fees be if I moved my vendor payments from checks to ACH?
• Who do I call when a charge on the analysis statement does not make sense?

Where owners trip up when they try to cut fees

The first trap is choosing a bank only on the advertised monthly charge. A low monthly fee with tight paper and cash limits can cost more than a higher fee with room to grow, especially for a business that handles cash. The second is draining the operating account to chase interest elsewhere and losing the earnings credit that was covering the fees. The third is cutting a service such as positive pay to save a line item, then absorbing a fraud loss that costs far more.

The last one is switching banks over a fee difference without counting the cost of the switch: new checks, updated payroll and vendor details, re-enrolled tax payments and a few weeks of running two banks in parallel. If you do decide to move, plan it properly. My guide on switching business banks without missing payroll walks through the order of steps.

A fee review is a reasonable thing to ask for

If you bank with a relationship banker, a fee review should not feel like a confrontation. Send the last three analysis statements, or regular statements if you are on a flat-fee account, along with a short note about how the business has changed: new locations, more cash, more vendors, fewer checks. A good banker will come back with an account structure that fits the way you operate now, not the way you operated when the accounts were opened.

For business owners across Dallas–Fort Worth, I am happy to look at those statements and explain what I see, whether or not you end up moving anything. Pricing at any bank is set by that bank and changes over time, so treat anything you read here, including the account descriptions above, as a starting point for the conversation rather than a quote.

Questions people ask me