Compare Basic Business Savings Accounts From Top U.S. Banks
Most business owners don’t have to be told the importance of a business checking account. They use these accounts to separate their business and personal funds, which makes it easier to track business expenses and income.
But, what about a business savings account? Are these equally as important as a business checking account?
As a business owner, you might think it’s easier to keep all business funds in a single checking account. But the same way you have savings for personal funds, it’s also beneficial to have one for business funds.
Monthly Fees for Basic Business Savings Accounts at Top 10 U.S. Banks
|Bank||Account||Monthly Fee||How to Waive Fee|
|Capital One||Spark Business Savings||$0||N/A|
|Live Oak||Live Oak Business Savings||$0||N/A|
|TD Bank||TD Small Business Savings||$5||
|Bank of America||Business Investment Account||$5||
|Chase||Chase Business Total Savings||$10||
|Santander||Basic Business Money Market Savings||$10||
|BB&T||Business Money Rate Savings||$10||
|Fifth Third Bank||Business Relationship Savings||$0||N/A|
|M&T Bank||Commercial Savings Account||$5||
|Citizen's Bank||Business Savings Account||$4.99 (fee is automatically waived for first 4 months)||
Why Do You Need a Business Savings Account?
There’s no rule that says you must have a business savings account. However, before you downplay the usefulness of a business savings or say one isn’t necessary for your business, here’s a look at five advantages of spreading your money across separate accounts.
Gives you a cushion for emergencies
Many money experts recommend having a personal emergency fund with at least three to six months (or more) of income.
Your finances can be unpredictable. A savings account, however, is a place to keep cash for unexpected expenses. This protects you in the event of a job loss or other financial emergency.
The same concept applies to a business.
A business savings account can keep you afloat until you’re able to get your business back on its feet again. In fact, a business savings account could be the difference between weathering a financial storm and having to close your business doors for good.
In fact, a business savings account could be the difference between weathering a financial storm and having to close your business doors for good.
Even if your business is booming and earning a lot of income, you may experience lagging sales in the future. This can make it difficult to cover overhead expenses. This extra cushion can help.
Safer than keeping all your money in one place
Keeping all your money in one account may seem easy and convenient. The problem with this approach is that it only takes one hacker or thief to wipe out your funds.
If your business debit card is lost or stolen, someone could use this card for a spending spree and leave your business penniless or with little funds to pay your employees, suppliers, and creditors.
Yes, business savings accounts are also FDIC-insured up to $250,000, so you’ll get your money back. Even so, reimbursements aren’t immediate.
It could potentially take between 7 to 10 days to get your money back. In the meantime, your business may have little cash flow to function.
But with a business savings account, you’re able to transfer emergency funds into your business checking account. You can then continue operating your business until the bank reimburses the stolen funds.
Helps you get a business loan and protects your credit
A small business loan can provide needed funds to grow or expand your business. Unfortunately, getting a business loan isn’t as easy as getting a personal loan.
Some banks and credit unions require a business to have its own credit score. In addition, business owners must put up collateral as security for the loan.
Collateral can include a variety of assets such as equipment and property. Sometimes, banks even allow borrowers to use funds in a savings account as collateral for a loan. This is known as a cash-secured loan.
So, if you’re interested in a business loan, your odds of approval might jump if you already have cash in the bank. This builds the bank’s confidence in your ability to repay the loan.
Along with making it easier to get a loan, a business savings account can also have an indirect positive impact on your credit score.
If you face a financial emergency and don’t have enough cash in the bank, you might be forced to use a credit card. As a result, you could accumulate more credit card debt than you can afford.
If you can’t afford your minimum credit card payments and you default, your business and/or personal credit score can decrease.
Provides a safe place for income tax money
Not only can a business savings account help you save money for an emergency. It also provides a safe place to deposit cash needed for quarterly or yearly taxes.
You can open multiple savings account as a business owner. Designate one account for unexpected expenses. And then transfer funds for federal and state taxes into another account.
Earn interest on your deposits
Another benefit of keeping your money is a savings account is the opportunity to earn interest on your deposits. Some business checking accounts also earn interest.
However, the percentage may not compare to what you could earn with a savings account.
Factors To Consider When Choosing a Business Savings Account
Now that you know the importance of having a business savings account, it’s time to choose the right account for your money.
Business savings accounts are not created equal. So make sure you shop around and compare features and terms. For example:
Monthly service fees
Bank fees are practically the norm nowadays. As you shop around, you’ll find that many banks charge a monthly fee for business savings accounts.
These fees vary, but might be as low as $5 a month up to $20 a month. Regardless of how little a bank charges, fees add up over the course of a year. One way to save is by choosing a bank that waives the service fee under certain circumstances.
Fee waiver requirements vary. However, you might be able to avoid this fee if you maintain a certain minimum balance. Some banks also waive the fee if you maintain a minimum daily balance or a minimum average monthly balance. This applies to each statement cycle.
Minimum balance requirements
With a minimum balance requirement, your business savings account’s balance cannot drop below a certain minimum at any time during the statement cycle.
If there’s a minimum daily balance requirement, you must maintain a certain balance in your account at the end of each business day.
Sometimes, there’s an average monthly balance requirement. The bank adds up your balance at the end of each business day and divides this number by the number of days in the statement cycle. This determines your average monthly balance.
Minimum balance requirements with a savings account might be as low as $250 or up to $10,000. So, estimate how much you’re likely to maintain in your business savings account at all times to help determine which account is right for you.
Maybe you think you’re unable to maintain a certain minimum balance to avoid the monthly fee. If so, some banks may also waive this fee under other conditions. This includes having at least one automatic deposit or transfer into your business savings account each statement cycle.
Transaction and deposit fees
You should also review your bank habits over the last few months. This way, you can estimate how many transactions or deposits you’re likely to make in a statement cycle.
This is important because many business savings accounts charge a transaction fee.
You’re allowed a limited number of free transactions or deposits per month. You’re then charged a fee for every deposited item that exceeds the free amount.
Some banks allow 30 fee-free transactions and then charge $0.40 per extra deposit.
Other banks may only allow up to 15, 20, or 25 fee-free transactions in a statement cycle.
Cash deposit fees
Not only do some business savings account charge a transaction fee, some also charge a cash deposit fee.
Basically, you’re allowed to deposit up to a certain amount of cash each statement cycle fee-free. After exceeding this amount, you’re charged a fee per $100 deposited in cash.
For example, a bank may allow you to deposit up to $5,000 in cash per month without a fee, and then charge $0.30 per $100.
Business Savings Cash Deposit and Transaction Fees at Top U.S. Banks
|Bank||Account||Cash Deposit Processing Fees||Transaction Fees|
|Wells Fargo||Business Market Rate Savings||No fee for first $5,000, then $0.30 per $100 deposited||No fee for first 20 transactions, then $0.50 per item|
|Capital One||Spark Business Savings||No fee for first $2,000, then $2.00 per $1,000 deposited||None|
|Live Oak Bank||Live Oak Business Savings||N/A||No fee for first 6 transactions, then $10 per item|
|Bank of America||Business Advantage Savings||No fee for first $5,000, then $0.30 per $100 deposited||No fee for first 25 transactions, then $0.45 per item|
|Chase||Chase Business Total Savings*||No fee for first $5,000, then $2.50 per $1,000 deposited
*For all Chase business accounts, fee is only charged if you need a night drop, post verification, or immediate verification.
|No fee for first 15 transactions, then $0.40 per item|
|Santander||Basic Business Money Market Savings||$0.22 per $100 deposited for Express Cash Pack, or $0.15 per $100 (for deposits $500 or less), or $0.27 per $100 deposited (for deposits $500 or greater), for Non Express Cash Pack||None|
|Fifth Third Bank||Business Relationship Savings||For deposits $25,000 or less, $0.026 per $1 deposited
For deposits between $25,000 and $100,000, $0.032 per $1 deposited
For deposits $100,000 or greater, $0.037 per $1 deposited
|No fee for first 100 transactions, then $0.515 per item|
|M&T Bank||Commercial Savings||No fee for first $5,000, then $0.25 per $100 deposited||No fee for first 10 transactions, then $1.00 per item|
|Citizen's Bank||Business Savings||No fee for first $5,000, then $0.75 per $1,000 deposited||No fee for first 200 transactions, then $0.50 per item|
Don’t open a business savings account without comparing interest rates among different banks and credit unions.
Ideally, you should get rates from at least three or four different banks to make sure you’re getting the highest return on your money.
Also, rather than open your account with a brick-and-mortar bank, consider opening a business savings account with an online-only bank.
These banks typically offer the highest returns on savings accounts. Plus, some online banks have lower minimum opening deposits and lower monthly service fees.
Savings withdrawal limits and wire transfer fees
Keep in mind that many banks also charge a fee if you make a large number of withdrawals from your savings account in a statement cycle.
This is your account, and yes, you’re free to withdraw money when you need it. Even so, there are limits to how often you can tap your account. If you exceed six withdrawals from your business savings in a statement cycle, some banks charge anywhere from $5 to $20.
If you exceed six withdrawals from your business savings in a statement cycle, some banks charge anywhere from $5 to $20.
Additionally, if sending money by wire transfer is your preferred method of money-exchanging, or you tend to do business internationally, taking note of your bank's wire transfer fees are important.
Often times banks charge less for wire transfers if you hold a business account with them, as opposed to a standard personal account. Some banks even offer additional services for wire transfers, for customers who are business-owners and have business accounts with them.
Business Savings Withdrawal and Wire Transfer Fees at Top 10 U.S. Banks
|Bank||Savings Withdrawal Fee||Domestic Wire Transfer||Foreign Wire Transfer|
|Wells Fargo||$15 per withdrawal over 6 per month||Incoming: $15
| Incoming: $16
|Suntrust||$5 per withdrawal over 6 per month||Incoming: $15
|Live Oak Bank||$10 per withdrawal over 6 per month||Incoming: $15
|Bank of America||No fee but if you frequently exceed 6 withdrawals every month, BofA may close your account||Fees vary based on account type||Fees vary based on account type|
|Chase||$5 per withdrawal over 6 per month||Incoming: $15
Outgoing: $35 if a banker helps you
$25 if done online
Outgoing: $50 if a banker helps you
$40 if done online
|Santander||$15 per withdrawal over 6 per month||Domestic Incoming: $15
Domestic Outgoing: $27
|BB&T||$15 per withdrawal over 6 per month||Incoming: $8
|Fifth Third Bank||$5 per withdrawal over 6 per month (up to 4 charges per month)||Incoming: $15
|Capital One||No fee but if you frequently exceed 6 withdrawals every month, Capital One may close your account||Incoming: $15
Business savings accounts offer a safe place to keep money for business taxes and emergencies. But these accounts do have limits and stipulations.
Therefore, shop around and understand the terms before opening an account.
This can help minimize your monthly fees. And the less you pay in fees, the easier it’ll be to grow your business savings account (and, in turn, your own personal savings account).