A high-yield savings account works just like a normal business savings account―just with a higher interest rate. You get to earn interest on your account balance (and you get FDIC insurance on your money too).
But while typical business savings accounts often have APY around 0.01%, high-yield savings accounts offer much higher APY―sometimes over 1%. Put simply, high-yield savings let you earn more interest with your money.
Historically, the Federal Reserve limited savings accounts to six transactions per month. But the Reserve lifted this rule in 2020. Some banks still self-impose that limit, though, so you’ll want to check with your bank of choice about any transaction limits they have.
Note that the ways you can access your account balance depend on whether you have a traditional savings account or a money market account. With a regular savings account, you usually can't use checks from your account. You can, however, use an ATM card (like a debit card that only works at ATMs) to withdraw money. A money market account, on the other hand, generally lets you use both checks and an ATM card to access your cash.
Interest rates fluctuate, so a good APY can change over time. Right now, the most competitive banks for business offer APY over 0.5%. But generally speaking, anything over 0.1% is already way above what you’d earn with most savings accounts.
The rates on high-yield savings accounts can change pretty much any time, but the frequency depends on the bank you use. Many, if not most, banks tie their rates to the Federal Reserves’ Federal Funds Rate, which means they adjust their rates when the Fed does.
Again, the actual frequency with which this happens can vary, but many banks adjust their rates on a monthly schedule.
You can put as much or as little money in your high-yield savings account as you want―as long as you meet any minimum balance requirements your bank has.
Many banks require a certain minimum deposit to open a savings account (often $100 or more), and some also require you to keep a minimum balance if you want to earn interest.
Of course, the more money you put in your savings accounts, the more interest you’ll earn.
No, you should not use a personal savings account for your business. There may be a few exceptions, but most businesses require business bank accounts. It protects you and your business, which you can learn more about in our guide to why you need a business bank account.