Bank Charges in Singapore - Types and ComparisonDownload Now: FREE GST 2023 GuidebookDownload Now: FREE Employment Pass ChecklistDownload Now: Free Incorporation Checklist
Navigating the world of banking charges is an essential aspect of managing your finances effectively, and when it comes to the vibrant financial hub of Singapore, understanding the intricacies of bank charges becomes even more crucial. From transaction fees to account maintenance costs, these charges imposed by various banks hold the potential to wield considerable influence over your financial decisions.
A business account proves invaluable for facilitating tasks like sending and receiving payments, administering salaries, and addressing diverse financial commitments. However, this convenience comes with associated costs. Banks impose fees for the services they offer, and many enforce penalties if you fail to meet specified criteria, such as maintaining a minimum balance.
Neglecting to track these numerous bank charges can lead to their rapid accumulation. Ensuring a clear understanding of the forthcoming charges before embarking on the process of opening a business account is essential. This underscores the importance of meticulously reviewing the fine print during the account initiation phase.
What Are the Different Types of Bank Charges?
Bank charges encompass the fees that banks impose for providing services, such as transfers, currency exchange, account management, loan processing, credit card allocation, and more. As a result, you might come across a range of bank charges, including account maintenance fees, withdrawal fees from ATMs outside the bank's network, and overdraft fees if you exceed your account balance. Furthermore, banks charge fees for paper statements or if you initiate a stop payment; however, you can avoid these charges. It's essential to compare different banks.
Compare the fee structures of banks and familiarise yourself with their services. Some banks offer accounts with minimal or no fees if you maintain a specific balance or fulfil certain criteria. Online banks might impose fewer charges compared to traditional brick-and-mortar banks. If you maintain a substantial account balance, search for accounts with no or low maintenance fees.
When opening a Singapore business account, make sure to keep an eye out for the common bank fees that could impact your financial operations. These charges play a significant role in effectively managing your business finances. Let's break down the typical fees you should be attentive to:
Administrative Bank Charges
Banks impose These charges to maintain and keep your business account running. They include:
- Account set-up cost: Some banks might charge a fee to initiate your business account, while others could provide this service free of charge. Ensure you understand the specific policy of the bank you select.
- Account maintenance fee: To sustain your account, you might need to pay a monthly or annual fee. Many banks offer a grace period during which these fees are waived for the initial months.
- Fall-below fee: If your account balance falls below a predetermined daily or monthly threshold, the bank may impose a minimum balance service fee.
- Excess fee: Transacting from your business account with insufficient funds can lead to an additional charge. The bank's response can either involve rejecting the payment and imposing a fee (simillar to an overdraft fee) or approving the request while levying an extra amount. Consequently, you will be responsible for settling both the surplus amount and the associated fee.
- Early account closure fee: Should you decide to close your Singapore business account within a specified timeframe, such as six months or a year after its opening, you could be subject to an early closure fee.
- Inactivity fee: Inactive accounts may incur an inactivity fee or dormant account fee if the period of inactivity extends for a year or more. Generally, this fee is applied on a monthly basis.
- Premature withdrawal fee: If you've invested in fixed or time deposits, the bank might impose a fee if you withdraw the funds before the agreed-upon maturity date.
Transaction Bank Charges
Whenever you engage in financial activities such as depositing or withdrawing cash, making payments, or receiving remittances, your bank will apply a fee (unless it is waived). The specific amount of this fee can vary, contingent upon the method of transfer being used:
- Often referred to as telegraphic transfers (TT), come with a higher cost due to the inclusion of a processing fee that averages around SGD 20. Additionally, there is a handling commission and an agent fee (charged by the recipient bank) involved. These cross-border wire transfers are facilitated through the SWIFT (Society for Worldwide Interbank Financial Telecommunication) messenger system. While the fee associated with wire transfers might be relatively higher, they continue to be the favored option for securely moving funds across international borders.
FAST (Fast and Secure Transfers)
- Facilitates electronic money transfers between FAST bank and non-bank partners within Singapore. Engaging in an online FAST transfer represents one of the most cost-effective methods for moving funds. Conversely, opting for an over-the-counter transaction will result in incurring a considerably higher fee.
- Businesses harness the capabilities of GIRO to effectuate one-time and recurring payments via a network of participating banks in Singapore. Similar to FAST, GIRO transfers offer affordability, with an average cost of less than SGD 1 per transaction.
- PayNow empowers seamless transfers among 15 participating banks and four non-bank partners, providing users with the convenience of instantly collecting SGD funds. This service comes at no cost for customers of the participating banks.
- MEPS, an acronym for MAS Electronic Payment System, operates as a local inter-bank electronic payment system. It tends to carry a higher expense compared to FAST, GIRO, and PayNow due to its distinct features and functionality.
The Automated Clearing House (ACH)
- The Automated Clearing House (ACH), a network in Singapore primarily geared towards processing SGD and USD-denominated cheques drawn on Singapore banks, is a financial conduit with a specific purpose. Notably, the processing of foreign currency cheques incurs substantial bank charges.
- Demand draft transfers exhibit relative affordability, as the corresponding bank fee remains a small percentage of the payment amount.
Debit/credit card transfers
- Debit/credit card transfers, while offering convenience, do come at a greater cost than traditional bank transfers. This stems from the additional charges imposed by the card provider for facilitating such transactions.
- Conversely, over-the-counter or manual transfers are recognised for their higher associated costs when juxtaposed with their online counterparts. This disparity underscores the cost-effectiveness and efficiency that online transactions bring to the fore.
Cheque-Related Bank Charges
Banks impose fees for various cheque-related services, including issuing a chequebook, ordering additional checks, or providing replacements in case of loss. Typically, the first chequebook, and sometimes the first two, are offered at no charge.
Processing cheques also incur charges from banks. If your cheque bounces due to insufficient funds or technical issues (such as an incorrect date or mismatched signature), the bank enforces a fee for the returned cheque. Opting to cancel a cheque after it has been sent out results in a stop payment cheque fee. If you need digital images of cheques cleared through your account for record-keeping, the bank will charge a cheque retrieval fee.
Similarly, requesting the bank to 'mark' a cheque for immediate payment upon presentation comes with a marked cheque fee.
Other fees that a bank may charge include:
- Card-related problems fee
- Digital services fee
- Document-related fee
What Are Singapore's Bank Charges?
Leading the charge among domestic banks are DBS Bank Ltd, United Overseas Bank Limited (UOB), and Oversea-Chinese Banking Corporation LTD (OCBC). Now, let's actively explore their business account charges to gain valuable insights into their fee structures:
- DBS, the largest bank in Southeast Asia, offers a range of accounts, including the Business MCA Starter for small companies. Account fees range from SGD 10 per month to SGD 50 per annum, with exceptions for certain accounts. They charge a SGD 40 fall-below fee if the account balance drops below SGD 10,000. For excess fees, they apply a standard SGD 10 overdraft charge for SGD accounts, along with an incidental charge of SGD 30 or more. Closing an account within six months costs SGD 50. Transaction fees vary, with free FAST and GIRO transfers for certain accounts and a rate of SGD 30 excluding additional agent fees for international telegraphic transfers.
- UOB, standing for "United Overseas Bank," a key player in the Asia-Pacific with an extensive network of 63 branches in Singapore, outlines its bank charges as follows: they impose an annual account fee of SGD 35, which would be waived on the account opening year. Besides, they levy a SGD 15 monthly fee for average daily balances below SGD 10,000, apply varying excess fees for different account types, penalise SGD 50 for early account closure within six months, and charge transaction fees ranging from SGD 0.20 to SGD 10 for online GIRO transfers to SGD 15 for over-the-counter funds transfers in multi-currency accounts.
- OCBC, represented by "Oversea-Chinese Banking Corporation," the oldest established bank in Singapore since 1932, presents its bank charges as follows: an SGD 10 monthly fee for the SGD Business Growth Account, waived for the initial two months; a similar fee structure for the Multi-Currency Business Account with exemptions; varying monthly fall-below fees depending on the account type; distinct excess fees for SGD and multi-currency accounts; SGD 50 early closure fee for certain account types; and transaction fees such as bundled GIRO and FAST transfers at the rate of SGD 0.20 - SGD 10 charged per transaction and SGD 20 for over-the-counter SGD transfers. Multi-currency account holders encounter a minimum of SGD 25 not including additional agent charges.
Better Alternative for Business Owners: Digital Business Account
Offering a more advantageous option compared to traditional banking methods, digital business accounts bring tailored benefits and conveniences to businesses. These modern accounts enable entrepreneurs to streamline processes, enhance accessibility, and improve financial management capabilities.
Digital business accounts offer features such as real-time transaction monitoring, seamless online transactions, and integrated financial tools. This translates to quicker decision-making, reduced administrative burdens, and the ability to manage finances on the go. Furthermore, digital business accounts often come with zero upfront fee payment and lower transaction costs compared to traditional banking services. Here are the benefits:
1. Easily Onboard without Monthly Fees
Initiate your account anytime and anywhere – no need to visit our premises. Simply provide your company details for registration.
2. Securely Transfer Funds Across Borders And Currencies
Effortlessly conduct local and international transfers to over 190 destinations, all at competitive rates. Enjoy savings of up to 70% on FX transfer charges when sending and receiving payments from clients worldwide.
3. Streamline and Digitise Your Expenses
Efficiently track and digitize all your expenses in one centralized platform.
Understanding and navigating bank charges in Singapore is crucial for effective business finance management. Whether it's administrative, transaction, or cheque-related fees, being informed about various costs is essential. Moreover, digital business accounts emerge as a superior alternative, offering tailored benefits like real-time monitoring, seamless transactions, and integrated financial tools. With competitive fee structures, these accounts provide a more efficient and cost-effective solution for business owners, empowering them to manage their finances with confidence and convenience.
Are you looking to avoid bank charges that could impede your business progress? If you're in search of a solution, look no further than the Grof Business Account. At Grof, we offer an all-in-one solution that not only helps you reduce various fees but also allows you to seamlessly track and digitise all your expenses in one convenient place. Want to discover more about how Grof can benefit you? Visit our website, your ultimate destination for managing payments, transfers, and accounting. Let Grof take care of it all while you focus on growing your business with our comprehensive solution.