Business Deposit Accounts
What are Business Deposit Accounts?
Business Deposit (or investment) accounts allow your business to earn interest on lump sums or regular amounts of money paid into the account. There may be a notice period you need to provide to make withdrawals. If you don't give the required notice you will be penalised, usually by a loss of interest.
Notice periods are typically 7, 30, 60 and 90 days, although some accounts have other periods. As a general rule, the longer the notice period, the higher the interest rate.
Who are they Suitable
For?
No-notice deposits accounts are suitable if you want to avoid being penalised for making unscheduled withdrawals.
Higher rates of interest can be obtained on notice accounts so if you can take a longer term view of withdrawals this may better for your business.
What to Look Out For
Make sure you understand exactly what the notice period is and what the penalty is for early withdrawal.
Penalties are usually in the form of lost interest. This will be for the same amount of time as the required notice period, but could be longer. So if the penalty is 60 days loss of interest and you want to withdraw £1000, the interest you would have earned on that amount for the 60days prior to the withdrawal will be discounted.
Interest rates may have an element of bonus for a specified time. If this is the case, you'll need to keep an eye on the account to ensure you're getting a competitive interest rate.
What to do next
Take a look at our guide on Things to Watch Out For and
get a feel for the Key Factors to Consider when choosing a business bank
account, so you can go in knowing what you're looking for.
Then compare business savings accounts to find the
best deals around with our best buy tables or product searches.
Related Links
If you are reviewing your business banking needs, why not check you are getting a good deal with the help of our business best buy charts.
