How to choose the best high interest business bank account in 2024?

In business, as in life, it's all about the long game. When choosing a business bank account, you need a partner who shares your long-term vision.  A high-interest business account isn't just about today's profits – it's about building a solid financial foundation for the future.

Understanding your specific business requirement is crucial. Do you need a bank that offers convenient access to physical branches, or are you comfortable with online-only banking? Do you require specialised services like business loans, merchant facilities or international money transfers? How important are features like budgeting tools, expense tracking etc?

By defining your priorities, you can narrow down the options and focus on the business banks that truly cater to your business needs. Let’s dig into that.

Tip 1 - Check the annual percentage yield. 

The annual percentage yield (APY) is a critical factor when selecting a high-interest business bank account because it represents the actual annual return you'll earn on your deposits, including the effects of compound interest. A higher APY directly translates to more money in your pocket over time.

In Australia, where interest rates can vary significantly between financial institutions, understanding the APY helps you make informed comparisons and choose the account that offers the best value. Even a seemingly small difference in APY can lead to significant variations in earnings over time, especially with larger balances.

It's important to note that APY can be variable or fixed. A variable APY fluctuates with market conditions, while a fixed APY remains consistent for a specified period, typically the term of a deposit. Depending on your risk tolerance and financial goals, you can choose the type of APY that best suits your business needs.

Additionally, some banks may offer introductory or bonus rates higher than the standard APY. While these can be attractive, it's crucial to understand how long the promotional rate lasts and what the standard rate will be afterwards.

To learn more about high-interest savings accounts, check out this comprehensive guide on Thriday: What is a high-interest business savings account? A comprehensive guide

Tip 2 - Know the interest payment frequency.

The frequency with which interest is paid out can significantly affect your cash flow and investment strategy. Some accounts offer monthly interest payments, which can be beneficial for businesses thahttps://www.thriday.com.au/blog-posts/choosing-the-best-business-bank-account-savings-vs-term-deposits-explainedt need regular income from their savings. Others may pay interest quarterly, annually, or only at maturity (in the case of term deposits). Determine which frequency aligns best with your financial planning and cash flow needs.

Check the difference between business savings account and term deposit account.

Tip 3 - Consider fees.

High-interest rates might grab your attention, but don't overlook the fees associated with the account. Monthly account maintenance fees, transaction fees (for electronic transfers, ATM withdrawals, etc.), and excess withdrawal fees can quickly add up and erode your interest earnings.

Be sure to thoroughly review the fee schedule of any potential account. Some banks may waive fees if you maintain a minimum balance or meet specific transaction requirements. Understanding the fee structure upfront will help you avoid unpleasant surprises and choose an account that maximizes your bottom line.

Tip 4 - Assess access to funds.

Consider how quickly and easily you need to access your funds. If you require regular access for day-to-day operations, a business savings account with no withdrawal restrictions might be the best option. However, if you're comfortable locking away a portion of your funds for a longer period, a term deposit could offer a higher interest rate but with limited access until maturity.

Tip 5 - Evaluate opening deposit and balance requirements.

Many high-interest business bank accounts require a minimum opening deposit or minimum balance to earn the advertised interest rate. Before committing to an account, ensure that you can comfortably meet these requirements without compromising your cash flow.

Tip 6 - Research the bank's customer service and reputation.

Your relationship with your bank goes beyond interest rates and fees. Excellent customer service can be invaluable when you encounter issues or have questions about your account. Look for a bank with responsive customer support channels, whether it's phone, email, live chat, or even in-person assistance at branches.

Research the bank's reputation by reading online reviews and testimonials from other businesses. Check their financial stability ratings and history of customer satisfaction to ensure you're partnering with a trustworthy institution.

Tip 7 - Understand introductory vs. ongoing rates.

Don't be fooled by flashy introductory rates. While they can be tempting, focusing on the ongoing or standard interest rate is crucial for long-term financial planning. Introductory rates often expire after a set period, and you'll be left with the standard rate, which might not be as competitive.

Compare the ongoing rates of different banks to ensure you're making a sustainable choice that benefits your business in the long run.

Tip 8 - Explore other financial products.

Many banks offer a suite of financial products beyond just savings accounts. These can include business loans, credit cards, merchant facilities, and even cash flow reports. Consider whether you might need these additional services in the future and if the bank can meet those needs.

Thriday goes beyond basic banking, offering a suite of features designed to free you from financial admin burden.

• Multiple bank accounts:  Open up to 10 *bank accounts to easily organise your finances for different purposes (e.g., taxes, payroll, savings).
• Automated accounting payments: Schedule and automate payments for GST, tax, superannuation, and payroll.
• Cash flow and tax forecasting: Get insights into your financial future to make informed decisions.
• Expense tracking and insights: Gain detailed transaction data to track expenses and identify spending patterns.

Want to know more how Thriday can help you? Schedule a call with us today!

Frequently asked questions

How can I find the highest APY for my business savings account?

It's not just about the advertised rate. Research different banks and compare their APYs for the specific type of account you need (e.g., savings, term deposit). Look beyond the big banks to online banks and credit unions, as they often offer more competitive rates. Be mindful of introductory rates and focus on the ongoing APY to assess long-term value.

Why are introductory rates important to consider?

Introductory rates can be enticing, but focusing on the ongoing rate is crucial for long-term planning. Be sure to understand when the introductory rate expires and what the standard rate will be.

What factors should I consider when choosing between a savings account and a term deposit?

Savings accounts offer flexibility and easy access to your funds, while term deposits typically provide higher interest rates but have restricted access until maturity. Choose the option that best suits your cash flow needs and financial goals.

How can I research a bank's reputation and financial stability?

Read online reviews and testimonials from other businesses. Look for financial stability ratings from reputable sources and research the bank's history of customer satisfaction.

The Bottomline

‍Remember, no single business bank account is a perfect fit for every company. But by carefully researching and comparing your options, you can avoid unexpected fees and find the right bank account to help your business thrive. With the right account as your foundation, you can explore other banking products like savings accounts to create a comprehensive financial strategy that supports your business' growth and stability.