By Nigel Bowen
There’s more to choosing a business savings account than just going with the one that pays the highest interest.
If you have a business, you need a business savings account. Given that every financial institution with a couple of dollar coins to rub together offers some sort of account aimed at businesses, which one should you choose? Here are three things to take into account.
The interest rate
Any business savings account marketing itself as high interest should currently be offering you a rate somewhere between 5.3 per cent and 5.75 per cent. It’s worth noting that out of the five highest interest rates offered by Australian high interest savings accounts, only two are from a big 4 bank*. So it’s worth doing some internet research, rather than just ducking into whatever bank is closest to your business.
So should you just go for the account offering the highest interest rate? Not necessarily, as it may instead be worth forgoing up to half a per cent of interest to have an account well-suited to your needs.
Online or not?
A lot of high interest bank accounts require you to do everything online. This means you’re a low-maintenance customer and the financial institution can devote the money they save from not having to pay rent and staffing a branch to paying you a higher rate of interest.
Depending on the nature of your business, that may not be an issue. However, take into account that lack of real estate means you won’t be able to drop off the day’s takings or wander in for a face-to-face chat with a teller about an issue that you’re having.
There’s always a catch
To earn the impressively high interest rates plastered all over the marketing material of financial institutions, you often have to meet various criteria, which are generally mentioned in rather smaller print. Typically you have to deposit at least a couple of hundred dollars in the account each month and keep it above (and below) a certain amount.
This also may not be an issue, but be aware that if you hit a rough patch and fail to meet your side of the bargain, that dazzling interest rate will start to rapidly deflate.
Deciding which high interest savings account is right for your business is a decision with significant financial consequences, so take the time to check out the various options and what they involve before signing on the dotted line.