Certificates of deposit have a big advantage over standard savings accounts: higher APY, which means higher returns. They also have a big disadvantage: you can’t touch your money—at all—until the CD reaches maturity, unless you want to pay big penalties for early withdrawal.
The amount of time a CD takes to reach maturity, or the term, varies from bank to bank, and many banks offer varying lengths of CDs. You’ll most commonly see CD terms that range from six months to several years, but we’ve found some as short as a few days or weeks.
Generally speaking, the longer the term on a CD, the higher the APY. You can easily find business CDs with APYs over 1%, and you can even find some with APYs over 2%.
So if you want a bigger return, and you can handle leaving your money alone to grow, a CD might be just the business savings account for you.
Wish you could find a happy medium between traditional savings accounts and CDs? Let us introduce you to money market accounts.
Money market savings accounts tend to have higher APY than normal savings accounts (usually more than 0.1% but less than 1.6%), but they also give you some access to your funds. You can make six withdrawals per month (just like standard savings), and you can add money as often as you want.
Just note that money market accounts usually require you to maintain a higher minimum balance than a standard savings account would, so they’re best for businesses that can keep a good chunk of change in savings.