You’ve got a handle on your business finances, for the most part. You’re bringing in a healthy revenue and paying your employees. But what if you have a little extra cash you’d like to set aside for a rainy day? Having that money earn interest is certainly appealing. But which business banking account option offers the best business savings account?
Should I Get a Business Savings Account?
The short answer is yes. A business savings account is a good idea for just about every business. Setting aside money every month in a business savings account is a good way to prepare for unexpected expenses like plumbing, heating, or electrical problems that inevitably crop up from time to time.
When it comes time to find a place to set aside some business savings, with the opportunity to watch your unused funds grow, not all deposit accounts, online savings accounts, banks, and credit unions are created the same. See what banks give you the best return for your long-term goals — and a safe place to keep that extra cash flow — in this list of top options.
Types of Business Savings Accounts
A business savings account functions much the way a personal savings account does, and like your personal savings account, you earn interest on the money you have in the account. There are, however, a few different types of deposit accounts to consider, whether you open one through a credit union or a traditional bank.
What Are the 3 Types of Business Savings Accounts?
There’s nothing you aren’t familiar with here. The APR you can earn on your money may be the same as what you’d earn with a personal account.
High-Yield Business Savings Accounts
As you might guess, this account offers a higher interest rate. The higher interest rate does come with a cost though. For example, you may be required to maintain a higher balance in exchange for the higher interest rate, so it isn’t a good option if you expect you might need to drop below the minimum balance from time to time. You’ll want to ask your banker what those requirements are if you’re considering a high-yield savings account.
Certificates of Deposit
Another deposit account is the certificate of deposit, or CD. A CD will usually offer a high fixed-rate for your savings, but it also comes with a cost. When you use a CD to save, you are committing to leave your funds in the CD for a predetermined length of time. This could range from a few months to several years. Usually, the longer the term the better the interest rate.
Savings Deposit Account
A savings deposit account is the most liquid, but also offers the lowest interest rate. You might choose this type of account if you expect to be dipping into your savings on a regular basis or are just getting started.
You’ll want to consider how you expect to use your savings account before you decide which type of account you want. If you don’t want to maintain the higher balances associated with a high-yield savings account or want to maintain immediate access to your funds, a standard savings deposit account could be a good choice.
What is the Difference Between Business Checking and Business Savings?
Both business checking accounts and business savings accounts are important tools for helping your business manage your money. However, most checking accounts don’t allow you to earn interest on the money in your account, while most savings accounts do. Also, you may not be able to write checks from a savings account, although you may be able to check your account balance through an ATM card.
This means that business checking accounts are better for day-to-day transactions, like buying inventory, accepting payments, or running payroll. In contrast, business savings accounts are good places to store money for a longer term.
Choosing The Best Business Savings Account For Your Business
So now the time has come to determine what the best business savings account is for your needs. The easiest place to start is with the bank or credit union you already have a business checking account with, however, don’t limit your research to just that. You may find another bank that has a lower monthly fee or minimum deposit, or that offers features you prefer, like overdraft protection or mobile banking.
What to Look For When Comparing Business Savings Accounts
Small business owners have unique needs for savings accounts. Some might prefer higher yields and big deposit options, while others might prioritize convenience through online banking.
Here are a few factors to consider when comparing savings accounts:
- Interest rates
- Monthly maintenance fees
- Transaction fees
- Ability to waive the fees
- Minimum daily balance requirements
- Minimum opening deposit
- FDIC-insured banks (they’ll say “Member FDIC” after their name)
- Online vs. physical access
- Additional financial products the bank may offer
Now let’s look at the best business savings accounts we recommend.
Best Business Savings Accounts
Our top three business savings accounts for small businesses are: :
- Bluevine (actually a checking account!)
- Capital One Spark Business
- Bank of America Business Savings
Other business savings accounts you may want to consider include:
- Capital One Business Advantage Savings
- Live Oak Bank Business Savings
- Axos Bank
- First Internet Bank Business Money Market Savings
- TAB Bank Business Money Market Account
The Best Business Savings Account: Bluevine – 1%
The best business savings account is actually not a savings account! It’s a checking account, but its high interest rate makes it top our list.
You don’t see business savings account rates as high as 1% very often unless it’s a high yield savings account. But Bluevine is making a name for itself. Not only is the brand known for its business loans (they’re a partner of Nav’s) but now they also offer a business savings account with 1% interest up to $100,000 and no monthly fee.
And unlike a checking account, you can pay bills, write checks, and use your Bluevine debit card with this account. And if you’re interested, Bluevine also offers lines of credit and invoice factoring.
Runner-up: Capital One Spark Business – 0.4%
The Capital One Spark business offerings go well beyond its popular business credit card. Its Business Advantage Savings account is actually one of the more lucrative ways to earn. There is a $3 monthly fee for the savings account, but you can waive it by maintaining an average balance of at least $300.
You can earn 0.4% on balances up to $5 million and then 0.1 – 0.4% above $5 million.
Deposits (including cash deposits) are made at any Capital One ATM, using your Spark Business Debit card and PIN or with your Capital One mobile app, where you can snap a photo of a check and direct deposit it electronically. Savings accounts can make no more than six withdrawals per month, as allowed by federal banking regulations.
Capital One frequently offers promotional annual percentage yield (APY) rates (note that these eventually revert to the normal rate)., And you also have the ability to open a CD account, with rates of 0.35 – 0.4% for investments as low as $1,000 over 1-5 years.
While the account isn’t known for having the most competitive interest rates, if you’re already a Capital One Spark customer, it makes sense to add this to your banking portfolio.
Runner-up: Bank of America Business Savings – 0.01% (with possibility to earn more)
Bank of America’s Business Advantage Savings Account offers a respectable 0.01% APR, or up to 0.05% if you’re a Preferred Rewards for Business member.
The Preferred Rewards program provides a slew of benefits to qualified customers, including no banking fees, a 25% bonus reward on eligible business credit cards, a discount rate on business loans, and that bump up in APR for savings accounts.
The fee for the savings account is $15, but it’s waivable if you meet certain criteria.
What Is the Difference Between Business Savings and Business Money Market Accounts?
Another option to consider is a business money market account. It acts like a high-yield savings account in that you can earn interest on your money, but functions like a checking account in that you can pay for bills with a debit card or checks.
You may need to have a higher minimum balance for a money market account than a savings account, and the fees may be higher.
Business Savings Account Rates
As you can see from above, interest rates can vary from one bank to another (at credit unions, they’re called dividends). Generally, interest rates are a fixed rate that may fluctuate given market conditions.
Some banks will lower the interest rate if the minimum balance is high (think in the millions of dollars).
How to Open a business Savings Account
Once you decide which savings account is right for you, you’ll need to gather a few documents to open your account. Some online banking-centric institutions (like Bluevine) will let you open your account online, while others may want you to come into a branch. Also if you already have another account with a bank, you may be able to open it online.
To open your savings account, you’ll need:
- Business documents (DBA, articles of incorporation, articles of organization)
- Government-issued photo ID for you and any other employees who need access
- Employer identification number or social security number
- Business details including your physical address, business structure, and revenue
Frequently Asked Questions
Are you still unsure about the ins and outs of opening a business savings account? It can be confusing to understand the differences between types of accounts and what’s needed to set one up. Here are answers to some of the most common inquiries.
Which Bank Has the Best Business Account?
As we established above, the best business savings account is Bluevine’s account, with a 1% interest rate. We have determined the best business checking account to be Bank of America (who also ranked on our list here for savings). As with any banking service, your personal pick will come down to how you use your account, type of business, and whether you want an online-only or physical financial institution.
Who Pays the Highest Interest Rate on Savings?
Currently, Bluevine leads the pack with an impressive 1% interest offering. Of course, interest rates change. What may be the best bank now may not always take top place.
Can I Use My Personal Bank Account for my Small Business?
Many wonder whether they need to open a business account, but the truth is that establishing a banking history as a business is the only way to build your business credit and financial history – something that will be very important when it comes time to get business credit cards or business loans. A personal savings account – even an interest-bearing checking account — won’t help your business profile.
Do I Need a Tax ID to Open a Business Checking Account?
If you operate as a sole proprietor (individual business owner), it’s possible to do business without an EIN. It’s advised to get one as a security precaution, however, as it can stand in place of your social security number on tax and financial documents you may need to provide to customers and vendors.
For incorporated companies, a tax ID is needed. You’ll also want some common documentation, such as your business incorporation papers (if applicable) and proof of residency. If you already have a checking account or credit card with an existing bank, it’s possible you won’t need to present everything again, assuming none of your information has changed since you last opened an account.
Nav’s Verdict: Best Business Savings Accounts
The fact is: the best business savings account is the one that best suits your needs. You may want an account with a super low or nonexistent monthly fee, or you might care more about earning more interest. These three savings accounts are just options for you to consider as you do your own research.
Nav makes it easy to find your best business banking options.. Create an account to compare your opportunities instantly here.