How To Determine the Right Savings Account for Your Business
Here's what businesses need to know about choosing a savings account.
Most see savings accounts as related to personal finance. Yet businesses can benefit from maintaining these accounts, just as consumers can. While the topic of savings accounts isn't usually top of mind for many businesses, the advantages of having one are clear. However, owners are so often drawn in multiple different directions that it can be hard to sit down and sort through the savings account options they have.
The task is an important one: finding the right savings account for your business. There are a number of considerations owners have to take into account when researching the different types of accounts available to them. Finding a bank that has experience and expertise in offering such savings vehicles is step one. Here's what else businesses need to do to determine the right account for them.
Why a business savings account?
First off, it's a good idea to highlight all the ways in which a savings account can benefit a business. This is necessary because many owners may lack the information needed to make a decision, or otherwise not know such options are even a good idea for their company.
The advantages of having a savings account for a business are numerous. Namely, having rainy day savings for emergency expenses is crucial; while on the operations side of things, a savings account can help businesses improve cash flow management. Yet savings aren't used solely as contingency funds, they can be leveraged by businesses in other ways, like for tax planning and building up assets in anticipation of business expansion.
Of course, a primary benefit to savings accounts is money parked in such vehicles accrues interest over time. This didn't make much sense before when interest rates were near zero, but in an economy of gradual and regular Fed interest rate raises, a savings account becomes more attractive.
Here are some options to consider:
Standard Business Savings Accounts
This is the most common option that any business has for a basic savings account. Low minimum balance requirements and initial deposits make such accounts easy to open and manage without having to worry about keeping a constantly high balance. Businesses benefit from variable and premium interest rates—if their deposits qualify—and can take advantage of various perks, like fee-free ATM networks and online self-serve, depending on the bank.
Business Money Market Savings Accounts
These types of accounts are best for companies that want to put their money to work, while still maintaining a high level of liquidity. Businesses with a money market account can take advantage of competitive, tiered interest rates, while still retaining flexible control and access to their funds.
Business Certificates of Deposit (CDs)
A traditional way for businesses to save, CDs allows organizations to maximize their savings over a set time period, which can come in handy when planning long-term growth. These types of savings are FDIC insured, so businesses face low risks.
No matter what type of savings account your business favors, it's important to find a bank with terms, services and tools designed to help business banking customers. Vectra Bank can offer such advantages to businesses seeking a savings account. Contact us today for more information.