Written by Suzette Covalt
Did you know your hard-earned money could be working for you too? Many business owners are so involved with running their business, paying their bills and servicing their customers that they haven’t had a chance to discover what they could be missing when it comes to the money sitting in their checking account and what this money could be doing for them. There is no reason this money should not be earning you some interest.
Are you planning for a big purchase? New addition? Business expansion? Capital campaign? Just in case? As this money grows to the goals you have set, where are you keeping it? How long do you need to save to reach your goal? Would it make your life easier if your bank or credit union helped you grow your money faster? Do you have all your business funds in one bank account? If you answered yes to any of these questions then maybe it is time for you to think about an interest bearing account and how utilizing one can help benefit your business.
Interest rates are on the rise for your deposit accounts (finally!) so, now is the time to look into an interest bearing account and see which ones work best for you and your business. What are interest-bearing accounts? Well, simply stated, they are financial products that pay you interest on the money you deposit. Your bank or Credit Union is paying you to keep your money with them! How cool is that?! These products range from liquid to specific time maturities.
Generally, the less accessible, higher balances and longer term determines your best rate; however, there are financial institutions that offer specials and you may find a higher introductory rate by simply asking. Here are three (3) of the most popular interest bearing accounts and their general descriptions:
Interest Bearing Business Checking
- Flexible with unlimited check writing, ATM and debit card usage
- Access to online and mobile banking
- May require a minimum balance to earn interest
Money Market Savings
- Flexible with unlimited in-person and ATM withdraws
- Limited to 3 checks per month
- Access to online and mobile banking
- May offer tiered rate/minimum balance requirements (which means as your balance increases to the next tier level your rate increases as well)
Fixed Term Certificate Of Deposit
- Terms range from 3 months to 5 years
- Generally no flexibility to access the funds until the end of the chosen term (maturity)
- In most cases a penalty of loss of interest is imposed (depending on the term of the CD) should you withdraw the funds early
Keep in mind there are rules to follow and you should always know what they are before you open the account. Not every bank or credit union have the same rules, specials or rates. Sitting down with your banker is the first step in helping to develop a good plan of action.
