Are you looking to open a high-yield business savings account to safeguard your money and earn interest?
Deciding which savings account is best for your needs is no easy feat. There’s a world of options out there. But if you know what attributes to look for, you’ll find the best business savings account with the right mix of services and high-interest returns.
Top 6 Picks:
|Bank||Interest Rate (APY)||Fees||Notes|
|Chase Bank||0.15% introductory|
0.4% over $25,000
|$20/month||Seamless transfers to checking accounts|
|Wells Fargo||2.03% introductory|
0.1% after 12 months
(waived w/ $10,000 balance)
|Higher fees, but highest introductory APY|
|Capital One||2% introductory|
0.4% after 12 months
(waived w/ $300 balance)
|Easily links with Capital One checking accounts|
|First Internet Bank||2.02%||$5/month|
(waived w/ $4,000 balance)
|ATM card only available for sole proprietors|
|Axos Bank||1.06% above $25,00|
0.8% below $25,000
|No monthly fee w/ $2,500 balance||Best fee structure|
|Live Oak Bank||1.1%||No monthly fees||Online only|
What Is a Business Savings Account?
If sales are booming and profit margins are trending upward, you may find yourself with a surplus of cash. What if you could make money off this balance without taking on the risks of investing in the stock market? With a high-yield business savings account, you can.
High-yield business savings account interest rates are, on average, 3 times higher than their checking counterparts.
You deposit excess funds and earn hundreds (potentially thousands) in interest without having to play the market.
Why You Should Open a Business Savings Account
The biggest reason to open up a business savings account is the high yields you can receive.
As the economy continues to rebound from the 2008 recession, interest rates are climbing. And with the emergence of online-only banks that have little overhead costs, interest rates can top 2% APY— far higher than the national 0.10% average. This means you can reach your financial goals faster.
What makes a high-yield saving account different?
- Keep Your Money Safe. FDIC insures up to $250,000, so there’s no risk of losing an investment should your bank fail.
- Easy Transfers to checking accounts when you need cash.
- Access to Small Business Loans<span style=”font-weight: 400;”>. Lenders like to see that your business generates enough revenue to save funds. Also, you can use your savings for a down payment and lower the cost of funding.
Small business tip: Unlike investing your money in the stock market, savings accounts are a risk-free investment. They’re FDIC-insured, but most banks have safeguards that make it nearly impossible to lose your money.
How to Compare Business Savings Accounts
With so many banks claiming to offer “the best high-yield business savings account in the industry,” it can be confusing and time-consuming to find the right one.
They work the same way: You deposit money, let it accrue interest and then withdraw funding when you need it. Each has its own terms, and that’s what you need to watch out for when making a decision.
Annual Percentage Yield (APY)
APY indicates the total return you’ll get on the money you have in the account per year. Interest rates can be fixed or variable, and compound daily or monthly.
Let’s take a look at an example of a business with $25,000 in a savings account with a 1.5% APY.
Account balance x APY = Yield
$25,000 x .015 = $375
The business owner can make an extra $375 just by leaving money in the account.
Fees on Business Savings Accounts
The number of fees your bank charges can nullify some of the gains you receive from opening a high-yield business savings account. They’re usually not very high (and can be waived if you keep your account balance above a specified threshold) but it’s important to account for all fees before signing on the dotted line.
If the above scenario included $20 in monthly fees, for example, it would cost $240 of that $375 just to keep the account open.
Look closely at any fees you’ll be charged. If they can be waived, assess whether you can keep the balance high enough to hit the minimums.
The amount you have in your account isn’t only used to calculate APY and fees. Some banks require you have a minimum amount of money in the account at all times.
This amount can be as little as $1, but some larger banks require you to keep thousands in the account. If you fall under this threshold, your account will be closed.
Access and Customer Support
When it comes to our money, we all want two things: security and access.
Many business owners prefer working with larger organizations that offer face-to-face customer support. If going to your local branch and speaking to a person about your account is important to you, online-only banks may not make sense for you.
Small business ownership is chock full of unexpected expenses. You never know when you may need to dip into your savings for a leaky pipe, inventory shortfall or business opportunity. Therefore, accessibility is a huge draw for many small business owners.
Not having a debit card or network of ATMs to turn to makes it difficult to get your money fast. Make sure to take this consideration into account when choosing a business savings account.
Are Business Savings Accounts Taxed?
This is a common question we see from business owners who worry about paying taxes on savings, much like you would with any gains made in the stock market.
Any interest you accrue in your business savings account is taxable.
You’ll need to fill out IRS Form 1099-Int annually to report this income.
Quick Reviews: Best Business Savings Accounts
After assessing how a business savings account could help you and prioritizing what you’re looking for in one, let’s see what each has to offer.
Chase Bank: Great Access for Chase Customers
While Chase Bank doesn’t offer high-interest business savings accounts, they do offer great intangible benefits.
New account holders will only receive 0.15% interest upon first deposit, increasing to 0.4% if you put in over $25,000. This may not seem like a lot, but it is still much higher than if you left your money in a checking account.
With thousands of national branches and ATMs nationwide, you’ll never be without access to your money. With 24/7 customer support and the ability to visit your local branch, you can get help whenever you need it.
Plus, if you link your Chase Bank business checking account to your business savings account you’ll have monthly fees waived.
Chase Bank is an excellent option for:
- Current Chase customers
- Owners seeking constant access, support and security
- Businesses who will carry a balance over $25,000
Wells Fargo: Highest Intro APY from a Traditional Bank
Much like Chase and other traditional banks with high overhead costs, high-yield business savings accounts aren’t Wells Fargo’s calling card.
Instead, they entice customers depositing over $25,000 by offering a high 2.03% introductory APY for 12 months. After that, they drop down to 0.1%, in line with what most large banks offer.
If you have under $25,000 to deposit, you’ll begin at that 0.1% rate.
The $15 monthly fee is waived if you have a balance over $10,000, but Wells Fargo imposes other fees that cut into your potential savings. Wire transfers incur a $15 fee per transaction, and you’ll be charged $0.30 for every $100 you deposit over $5,000 a month.
Like Chase, the customer service and branch population of Wells Fargo make them a preferred choice for many customers. Access to a debit card and thousands of ATMs, as well as the ability to write checks, makes this account appealing to business owners with immediate cash needs.
Wells Fargo is a good option for:
- Current Wells Fargo customers
- Owners seeking access, support and security
- Larger businesses who want a higher introductory APY than most traditional banks
Capital One: Good Balance Between Traditional and Online-Only Banks
Known mostly for their credit cards, Capital One offers a great high-yield business savings solution for those who want the comfort of working with a traditional bank with the APY of online-only competitors.
The 2% introductory APY is on par with many online-only banks, but it drops down to 0.4% after 12 months. This number is still higher than most traditional banks and doesn’t come with minimum balance requirements.
Capital One only requires a $250 minimum deposit to start, and their low $3 monthly fee is waived if you carry a balance of $300 or more.
You can link your Capital One checking account for quick transfers, making for seamless access to your funds.
There are ATM fees for non-Capital One ATMs, which can cut into your savings if you frequently need to make withdrawals at other kiosks.
Capital One is a great option for:
- Owners who want a high introductory APY
- Those uncomfortable working with an online-only bank
- Smaller businesses who will carry lower balances
First Internet Bank: Highest Ongoing APY
Online-only First Internet Bank offers an average traditional savings account but with their money market account (MMA), you’ll accrue more interest than with any other option.
Money market accounts, as their name suggests, are tied to the current market rates. This means they aren’t fixed, ebbing and flowing alongside the economy. Given the uptick rates have seen since the 2008 drop, their 2.02% APY could continue to rise. Beware, however, that the market is liable to drop at any time.
A $5 maintenance fee will be waived if you have a balance over $4,000, but transaction and deposit fees remain.
Debit cards are only issued to sole proprietors, which can limit your access to funds. Even if you do acquire one, you’ll still be on the hook for ATM fees.
First Internet Bank is an excellent option for:
- Owners who prioritize APY
- Those who don’t prioritize access and face-to-face customer service
- Sole proprietorships
Axos Bank: Best Fee Structure
Another online-only organization, Axos Bank, aims to bring business savings into the modern era.
Accounts holding a balance over $25,000 enjoy a 1.06 APY, while those under have a 0.8% rate. This rate falls under other online-only options, but it’s well over the rate you’d receive at a traditional bank.
Axos provides you with a free debit card (although they don’t have any dedicated ATMs) and access to online and mobile banking at no charge.
Axos Bank offers the best fee structures. With an average balance over $2,500, you’ll have no monthly maintenance fees to worry about.
Axos Bank is a great option for:
- Owners who don’t want to pay fees
- Smaller businesses who will carry lower balances
- Those who don’t prioritize access and face-to-face customer service
Live Oak Bank: Limited Fees for Active Accounts
Our last online option, Live Oak Bank, offers a high 1.1% APY with an appealing fee structure.
The APY isn’t at the top of the market but is still considerably higher than most alternatives, including other online-only banks.
You won’t be charged any monthly maintenance fees unless your account goes dormant, you make over 6 transactions or the balance slips to $0. Wire transfer and stop payment fees apply.
Live Oak Bank is an excellent option for:
- Owners who make a few transactions per month
- Those who prioritize APY over access
- Those who don’t foresee using wire transfer or stop payment services
How Much Should a Business Have in Savings?
When you’re deciding between the top high-interest business savings accounts, you may be tempted to select the bank with the highest APY. Don’t. Take a hard look at your savings goals and the level of access you need before making a final decision.
If your savings goals are modest, don’t get discouraged and choose to keep your money in a checking account. It’s always best to save money when you can, no matter how small the amount may be. You never know when you’ll need some extra cash down the road.
If you plan on expanding your business in the future, start thinking about which account will get you where you need to be. Even if the amount you save isn’t enough to finance the whole expansion, it could be enough to cover a down payment on a small business loan.
Through Fast Capital 360, you gain access to multiple financing options.