One hallmark of the most successful businesses is the ability to invest profits to create diversified revenue streams that help offset market dynamics. For a business to maximize its potential and make use of gains, a sound investment strategy is a must. Investment is often considered the keystone of such financial strategies because gains can be dramatic and investment feeds the greater economic health, thus improving the economic environment for all. However, there’s a lot to be said for maintaining at least some uninvested cash, as it provides a liquid, immediately accessible pool of funding that will grow slowly over time.
While many may choose to put money in savings with a local credit union or bank, that may not represent the best way to make that money grow. Other savings account repositories, such as online credit unions in Lake City, MI, can provide greater returns on the same savings, providing a faster rate of growth while maintaining instant accessibility. Keep reading to learn more about some of the ways you can earn high interest on your business savings account.
Keep It Local with a Credit Union
Currently, brick-and-mortar banks are offering historically low interest rates on business savings accounts. In fact, it’s not uncommon to see rates of below 0.10% on business savings accounts offered by traditional banks. That’s a tenth of a percentage point return on money held in savings by a local bank, which is astonishingly low. Opting for a local credit union account over a local bank savings product can triple to quadruple your gain through a higher interest rate, which will help your money grow. Federal credit union rates offer share certificates which offer low-risk, high-yield products that can help your money grow quickly. Your money will be untouchable for the duration of the term, but you’ll get better dividends at the end through improved rates. Look for credit unions in your area that will pay a higher rate to members than a bank pays to its customers.
Opt for Longer Savings Periods
If you don’t need instant access to your funds, there’s a good chance that you can get a better rate by opting for a longer-term savings certificate. For example, a 3-month certificate may only pay you 0.03% but opting for a 6 month certificate could land you an interest rate of 0.045%. Selecting a 60-month certificate can provide you with the greatest return with an interest rate of more than 2%. If you don’t foresee needing instant ability to access your money, then a longer term makes more sense because it will nudge your interest rate higher with many institutions and provide for exponentially faster growth.
Look for Online Savings Accounts
While savings accounts typically offer lower rates of gain than investments, you can get a much better rate by opening a business savings account with a local bank. Because of their reduced overhead, many online institutions can offer savings interest rates that are more than double the rate of a traditional local bank, as rates can approach or exceed 2% online. Online money markets will also feature higher rates than their traditional bank counterparts. After all, online banks are paying 10 to 20 times more than local banks, which can help you stay ahead of inflation and grow your money, even if it’s growth at a fractional rate.
Consider Money Market Savings
Money markets will usually provide a slightly higher rate of interest than typical savings accounts, which may make them a more appropriate choice for businesses that want to see a higher rate of growth. Money markets give you an extremely fluid holding place for your funds while providing a higher rate of interest with little risk. You can access your money at any time without penalty, and that liquidity is attractive for businesses who want a higher rate of return but opt for the greater access and security of savings over investment.
Most businesses benefit from maintaining uninvested cash in a business savings account or money market. These financial tools can be profitable if properly deployed, so use these tips to guide your decisions about business savings. To learn more about earning higher rates of interest on your business savings accounts, contact Forest Area Federal Credit Union at (231) 879-4154.