The business savings account market is a minefield; hopefully our tips will help your business secure thousands more in interest, while reducing the risks.
1. Earn more interest by shopping around.
It may sound obvious, but it can be tricky to find information about the best business savings accounts and the time taken to scour the market can sometimes even cost more than the extra interest earned.
Savings Champion’s Best Buy Tables cover the whole UK savings market and are totally independent.
You are also welcome to call us for free on 0800 011 9705 and we will happily tell you the best rates available for your business’s circumstances.
2. Earn more interest by being more flexible.
Decide how flexible you can be about access to your company’s deposits.
How much cash does your business need to be able to access on an immediate basis? This amount should be deposited into easy access accounts.
If you can lock some away for longer in fixed rate bonds and/or notice accounts, it could improve the interest you can earn.
Notice accounts will normally require waiting a set notice period to access your cash, however some will allow you immediate access, subject to a penalty equal to the interest that would be accrued in the notice period.
The notice period doesn’t automatically start when you deposit the money, so you can leave it earning better rates until you need it. But this means that planning ahead is important, so that you can give the notice required before making a withdrawal.
Fixed rate accounts often pay better rates than easy access or notice accounts. Interest rates are fixed for the life of the deal, so you know what you are going to earn from the outset.
However, normally no withdrawals are permitted within the term, so you need to be happy to leave your money untouched.
3. Reduce risk by taking advantage of the free protection offered by the Financial Services Compensation Scheme (FSCS).
Should your bank or building society fail, the maximum pay-out is £85,000 per business, per FSCS licence, regardless of the size of your business.
Prior to 2015 only smaller businesses were protected, but this is no longer the case.
If your business has savings of over £85,000 and wants full protection this will require extra administration, as you may need to open and monitor multiple accounts and switch when fixed rate bonds mature, bonuses end, rates drop or a better-paying account enters the marketplace.
However, do not let this extra administration put you off as the reward is the peace of mind of knowing your business’s deposits are safe.
4. Reduce risk by checking for FSCS licence conflicts.
When you need to open a new account, check there are no clashes with amounts held in existing accounts and therefore the overall amount with any one licence does not exceed £85,000.
There are some providers that share a licence, so feel free to use our handy tool to check this.
5. Earn more interest by checking the small print carefully and diarising bonus end dates and maturity dates.
Some business accounts will come with strings attached, such as a bonus rate which drops away after a certain period.
While it can be beneficial to have the initial rate bolstered by a bonus or to lock into a good rate using a fixed rate bond, you will need to diarise when it ends so you remember to review your account at that time.
6. Earn more interest by regularly monitoring your accounts.
How will you know if your bank or building society drops your interest rate?
They should let you know, but the quality, standard and timing of the information that customers receive will vary from provider to provider – as well as the way the information is communicated.
To be sure, you will need to check your rate regularly.
7. Earn more interest by regularly monitoring the savings market.
Even when you have found the best accounts and deposited your money, new accounts and providers enter the marketplace all the time; how will you know if they offer better returns?
To do this you will need to monitor the market; you should compare any new accounts against the ones you already have and their corresponding FSCS licences to see if the account is suitable.
Also, you will need to check the account terms and conditions to make sure you are eligible to apply.
8. Earn more interest and reduce risk by letting us do the hard work for you, using our Cash Advice Service.
After all, what company wouldn’t want a better, more secure return for its deposits without the hassle?
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The Financial Services Compensation Scheme is also in place to protect businesses as well as consumers.
Understand the difference between easy access, notice and fixed rate bonds.
Learn more about the innovative 1 year fixed rate bond for businesses from Octopus Cash.