If you currently hold most of a your business cash in a current account, it’s worth noting that cash that is not currently required as capital for the day-to-day running of your business will usually generate more interest if you move it into a specialist business savings account. To help you choose the right option for your business, we’ve put together a selection of some of the latest business savings accounts in November 2014.*
Latest easy access account deals
If you’re likely to need access to your capital at short notice, Cater Allen’s Asset 30 account offers a rate of 0.65% AER/gross and pays monthly interest, with a minimum opening balance of £5,000. Withdrawals are permitted at any time, as long as you give 30 days’ notice.
The Bank of Cyprus offers a 95 Day Notice Account for businesses, which is open for balances of between £1,000 and £5,000,000 and offers 1.36% AER/gross. Interest is calculated daily and paid into the account each month. Withdrawals are only permitted subject to 95 days’ notice.
Latest short term fixed rate deals
Aldermore currently offers a 6 month fixed rate account for businesses, which offers a rate of 1.50% AER on deposits between £1,000 and £1million. Balances under £1,000 earn a rate of 0.05% AER. Aldermore also offers a 1 year fixed rate bond for businesses which pays 1.75% AER/gross, under the same terms as the 6 month fixed rate bond. Both bonds offer a 14 day cooling off period – if you change your mind within 14 days of funding your new business savings account, your savings will be refunded.
Latest longer term fixed rate bond deals
For those who are seeking a longer term fixed rate for their business savings, Cater Allen offers a variety of Small to Medium Enterprise Fixed Term plans ranging from one to three years in duration, which are available to businesses with a turnover of under £2.5m. Rates on offer range from 1.00% AER/gross for the one year bond through to 1.30% AER/gross for the 2 year bond and 1.90% AER/gross for the 3 year bond. The minimum deposit is £50,000 and no additional deposits or withdrawals are permitted. Interest on all three plans is paid on maturity.
AER – Stands for the Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year. (As every advertisement for a savings product which quotes an interest rate will contain an AER, you will be able to compare more easily what return you can expect from your savings over time)
Alternatives to fixed rate bonds
If you are prepared to tie up your business capital for a set period, you might want to consider an alternative product to a fixed rate bond, known as a structured deposit plan. This type of plan typically lasts for a three to six year term, and could potentially offer higher returns than a traditional fixed rate bond. Structured deposit plans offer returns that are linked to the performance of an Index such as the FTSE 100. Your capital is not put at risk, but any returns are not guaranteed as they are dependent on market performance.
The Investec 5 Year Deposit Plan which aims to provide a full repayment of capital at the end of the five year term, plus a minimum return of 20% provided that the Final FTSE 100 Index Level (subject to averaging) is higher than the Initial Index Level by any amount. If the Index rises by more than 20% the return will be 100% of the FTSE 100 growth, with no upper limit. If, at maturity, the Final Index Level is equal to or lower than the Initial Index Level, you will not receive a return but your initial capital will be repaid.
Structured deposit plans are capital protected. There is a risk that the company backing the plan or any company associated with the plan may be unable to repay your initial investment and any returns stated. In this event you may be entitled to compensation from the Financial Services Compensation Scheme (FSCS), depending on your individual circumstances. In addition, you may not get back the full amount of your initial investment if the plan is not held for the full term. The returns from structured deposits are not guaranteed. The past performance of the FTSE 100 Index and any companies listed on the FTSE 100 Index is not a guide to future performance.
No news, feature or comment should be seen as a personal recommendation to invest. If you are at all unsure of the suitability of this type of investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.
* Data accurate as of 21/11/2014.