Best Business Savings Accounts: How To Compare Rates and Find High-Yield Options

Even though stock market crashes and financial emergencies tend to be rare, they can still happen. Your ability to stay afloat in any market situation depends strongly on whether you have access to cash. With the best business savings accounts, you can enjoy good liquidity and earn interest on your savings.

Because you can’t control the broader economy and unexpected problems can appear at any time, most experts recommend saving enough to cover three to six months of expenses. However, you don’t simply want to have this amount sitting in your checking account. There are many types of high-interest business savings accounts you can choose from.

To help you determine the best savings account options for your needs, we’ll dive into the benefits and drawbacks of each account type.

TL;DR

• The right business savings account can help you have the right balance of liquidity and good interest rates.
• In general, it’s a good idea to have three to six months of business expenses set aside for an emergency. 
• The purpose of your savings account will determine the account type. For example, operational expenses must be in a liquid account. Do-not-touch reserves can be in illiquid, high-interest accounts.
• Pay attention to fees, setup processes, transfer options, and interest rates as you look for the right business account.
• An effective cash strategy separates your savings into operational cash, planned spending, buffer funds, and do-not-touch reserves.
• Four of the most common business savings account types are standard business savings, high-yield online business savings, money market accounts, and certificates of deposit.

How To Compare Different Types of Business Savings Accounts

Whether you’re working on your business credit score or need a buffer for unexpected problems, a business savings account can be an effective part of your company’s financial plan. As you consider which high-yield business savings account to get, there are a few key factors you should think about.

• Rate Potential: Review the business savings account rates from each bank or credit union. Make sure to note if it is tiered, promotional, or variable. 
• Liquidity: The liquidity of different accounts varies. On the high end, business savings accounts and money market accounts are known for being extremely liquid. In comparison, certificates of deposit are notoriously illiquid. 
• Fees: Accounts may charge monthly maintenance fees, termination fees, and fees for not maintaining a minimum balance. These costs can add up, so be aware of them before you sign up for the account.
• Insurance: Check to see if the bank account is insured by the Federal Deposit Insurance Corporation (FDIC). If it is a credit union, find out if it is insured by the National Credit Union Administration (NCUA).
• Functionality: Often, your savings purpose is the most important factor in selecting an account. For instance, if you are keeping money on hand for payroll or emergencies, you need a liquid savings account that doesn’t tie up your company’s funds. Alternatively, you may opt for a certificate of deposit if you plan on using the money for a capital purchase in a few years.
• Setup and Usability: The setup speed, how easy transfers are, debit card access, and similar factors can enhance the convenience of your banking experience.
• Payment Processing: If your savings account will be used for your operating cash flow, you’ll likely want to consider its impact on payment processing. For example, you’ll need to see how it affects settlement timing and transfer speeds.

What Makes Sense for Your Company’s Cash Strategy?

Whether you are looking for high-interest business savings accounts or simply need a place to park your money before you pay payroll, there are a few ways to organize these transactions. When thinking about your cash strategy, it helps to look at it as four separate buckets. 

Your operating cash includes payroll, vendor costs, rent, and similar charges. It must be liquid and provide instant access so that you can easily pay these bills.

Meanwhile, your buffer money can go in a slightly less liquid account, such as a money market account. You don’t need instant access to your buffer funds, so a money market account is a good way to earn a little more interest on your savings.

Planned spending consists of purchases you plan on making in the future. For instance, buying new equipment or a truck might be something you plan on buying within the next year. While you still need to have access to planned spending, it doesn’t have to be fast access. Money market accounts, short-term certificates of deposit, and high-yield savings are all good options.

Finally, do-not-touch reserves are not supposed to be accessed. These can be placed in a certificate of deposit where they can earn significantly more money.

Types of Business Savings Accounts Compared

To help you determine the best business savings accounts, we’ve compiled some of the top options available. After a brief overview, we’ll dive into more detailed pros and cons of each option.

Account Type	Ideal For	Interest	Ability To Access Your Funds	Liquidity
Standard Business Savings	It’s a great option if you just need basic savings.	Low-moderate	You can immediately transfer funds from your savings account to your checking account.	High
High-Yield Online Business Savings	This account helps you maximize your interest rate without having to lose your liquidity.	Relatively high. It’s usually the highest interest option among liquid bank accounts.	Transfers generally take one to three business days to complete.	High
Money Market Accounts	You can retain your checking access while earning more in interest.	Moderate to high. Often, interest is tiered.	You can perform transfers. The accounts often have a debit card connected.	High-Medium
Certificates of Deposit	These are better if you want to get a higher interest rate and don’t need access to your money in the near future.	Higher. Because your money is locked up for a set term, the interest is higher.	Unless you pay a penalty, your funds are inaccessible until the term is complete.	Low

Standard Business Savings

This is the standard business bank savings account that you’ll find at a credit union or bank. Normally, you’ll set up a checking account at the same time. While the checking account is for your day-to-day transactions, your savings account provides you with better interest rates.

• Interest: In most cases, business savings account rates are low to moderate.
• Liquidity: The liquidity level is quite high. If you need money, there are very few limitations on when and how you transfer it.
• Setup Speed: These accounts are fast to set up.
• Best Use Cases: It offers an excellent emergency buffer. They are also useful for ongoing expenses. For example, many companies save their quarterly tax payments in them.

Pros

• It is extremely easy to set up.
• You can often set up a standard business savings account at the same place you bank at.
• With this account, you can easily transfer money to and from your checking account.

Cons

• A standard business savings account often charges fees if your balance falls below a set amount.
• The standard business savings account rates tend to be fairly low.
• There may be limits on the withdrawals and transfers you can make.

High-Yield Online Business Savings

High-yield business savings accounts are often offered by fintech companies or online-only banks. Because they have minimal overhead, they are able to offer a higher interest rate. It’s important to note that these accounts are accessed online, so you can’t run down to your local teller with a question or a quick cash transfer.

• Interest: When it comes to liquid savings accounts, a high-yield business savings account will generally offer the best deal around.
• Liquidity: They are just as liquid as traditional business savings accounts, although these transfers may take a bit longer to get to your account than transfers within the same bank.
• Setup Speed: While you will have to complete the business verification process, the setup speed tends to be quite fast.
• Best Use Cases: This option works great if you want to maintain liquid reserves and get a slightly better interest rate. Typically, high-yield accounts are used for long-term reserves you want to retain access to.

Pros

• You can receive better interest rates for your savings without losing any liquidity.
• Because they’re online, you get digital tools for tracking and managing your money.

Cons

• Customer service can be challenging, especially if they don’t offer telephone support.
• Transfers can take one to three days, which is longer than transferring money from a savings account at your own bank.
• Depending on the bank, there may be transfer limits.

Money Market Accounts

A money market account is like a blend of a savings account and checking account. It pairs an interest rate that is similar to a savings account with the accessibility of a checking account. For example, you may have a debit card or checks to use with your company’s money market account.

• Interest: Interest rates are often in the moderate to high range, but they may be tiered based on how much you have in the account.
• Liquidity: They generally have high to medium liquidity, but there may be withdrawal or transfer limits involved.
• Setup Speed: The setup speed isn’t exceptionally fast or slow. Before you open an account, you’ll need to provide documentation.
• Best Use Cases: A money market account is effective if you want the interest rates of a savings account with the direct access of a checking account. It’d be useful for payroll or operating reserves.

Pros

• It typically pays a higher interest rate than a standard savings account.
• In many cases, these are easier to access than traditional savings accounts.

Cons

• Interest rates may be tiered. If your balance drops, your rate may drop as well.
• There are often transaction limits.
• If you don’t meet the account’s minimum requirements, you may have to pay a fee.

Certificates of Deposit

Whether you’re a small business or a large corporation, a certificate of deposit (CD) can help you earn more interest than you would with a standard savings account. However, the added interest comes at the cost of your liquidity. Until the CD’s term length is up, you cannot access your money without paying a penalty.

• Interest: You can earn more interest with a CD than with a liquid savings account.
• Liquidity: They are not liquid. You essentially have to leave your CD untouched until the term is up.
• Setup Speed: Setting up these accounts tends to be easy and fast.
• Best Use Cases: CDs are designed to be your do-not-touch reserves. They are useful for holding money and earning interest over the long run, but they are essentially inaccessible until the term length is up. Some companies use staggered maturity dates to balance short-term access to cash with high APYs.

Pros

• These accounts offer predictable returns.
• The interest rate is higher than other savings options, and it’s generally fixed.
• You can typically select the term and funding amount.

Cons

Once you put your money in a CD, your cash is basically tied up until the term length ends.

If you pull the money out early, you’ll likely pay a penalty.

Popular Examples of Business Savings Accounts

Whether you’re looking for a money market account or are concerned about your payment processing costs, it helps to have an experienced team on your side. To help you find the right business bank account, we’ve compiled a short list of some of the best business savings accounts available today.

• LiveOak Bank: This is one of the best high-interest business savings accounts. It requires no opening fee or deposit.
• Axos Bank: Axos Bank is known for offering high interest rates. It also makes transfers and withdrawals as easy as possible.
• Chase: If you love having in-person banking options, Chase is the place to go.
• Capital One: Capital One is known for its many business-focused products and extensive ATM network.
• NBKC Bank: This bank offers an excellent money market account, which can be accessed through its convenient business card and checks. 

How PayCompass Supports Your Company’s Payment Processes 

At PayCompass, we have years of experience in helping merchants reduce payment processing fees and set up their merchant accounts. Our team of skilled payment experts helps merchants keep more of what they earn, so there is more cash leftover to store in a high-yield business savings account.

Because less revenue is lost to unnecessary fees, you have more net cash available. Rather than let this money go to waste, you can place it in an interest-earning account and bring in extra earnings. For more information about payment processing fees and business bank accounts, reach out to our team today.

Final Thoughts

While the annual percentage yield (APY) is a major factor to consider, it is certainly not the only one. You also have to consider transfer speeds, liquidity, account fees, minimum balances, and term lengths. Additionally, you’ll need to figure out if you are storing operating cash, do-not-touch reserves, planned spending, or buffer funds.

A successful cash strategy starts before cash hits your bank account. To ensure your company can maximize its revenue stream, you need to find affordable payment processing solutions. You’ll also need to decrease unnecessary banking costs, so more of your earnings remain with your business. 

Whether you’re searching for the best business savings accounts or need an answer to pressing payment gateway concerns, we can help. Learn more by reaching out to our payment experts today.