Interest rates: Does your savings account work for you?

July 27th, 2018

Every business wants their money to work harder but according to research from Aldermore Bank, more than 60% of SMEs currently earn zero interest on their savings.

It’s not surprising that financial pressures are the main reasons behind this figure, with 40% of those surveyed lacking sufficient monthly savings to accumulate any significant interest and 19% blaming record low interest rates.

Of those who are earning interests on business savings, fewer than 53% earn more than £300 annually. In reality, this figure is more like £100 for the majority of SMEs.

The findings also revealed that more than 65% of SMEs have a business bank account with the same provider as their personal savings, giving little thought to the interest that could be earned with other providers.

Some business savings accounts pay as little as 0.01% interest, meaning a company with £200,000 in savings would earn just £20 a year in gross interest. Yet being a savvy shopper and searching for the best deal could see you reaping a 0.9% interest rate, giving you an additional profit of £1,800 in a single year.

Under the current account switch guarantee, businesses with fewer than 50 employees and an annual turnover below £6.5m can benefit from a no fuss move that guarantees to have everything transferred with ease within seven days.

Despite fluctuating interest rates, our advice is to always shop around to find the best deal that works for you. A business savings accounts with a profitable interest rate based on your needs will boost cash reserves, helping to save for further purchases and drive long term growth.

For more support and advice, contact your local Champion office today.

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