Best Business Savings Accounts for March 2014
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 March 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.
Latest fixed rate bond deals
For those who are seeking a short-term fixed rate for their business savings, Bank of Cyprus UK offers a one year bond paying 1.50% AER/gross. You can withdraw up to 30% of the value of your initial deposit during the year that the plan is in effect, but you must give 35 days’ notice in order to do so. A maximum of two withdrawals of this type are permitted, and the plan is open for deposits between £10,000 and £1m.
If you’re prepared to lock your business capital away for longer, you may be able to get a slightly higher rate of interest. 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 1.30% AER/gross for the one year bond through to 1.50% 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 3 Year Deposit Plan offers a potential return of 12% after 3 years, provided that the Final FTSE 100 Index Level (subject to averaging) is higher than the Initial Index Level. 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.
Investec also offers a 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 30% 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 30% 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.