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What is interest business checking?

An interest business checking account has an annual percentage yield (APY) and accrues interest based on your account balance. Typically, this interest is calculated on a monthly basis. With a business checking account that earns interest, your money won’t just sit stagnant in your account. Instead, your balance has the ability to grow overtime.

Benefits of Interest Business Checking

Having an interest-bearing checking account for your small business comes with several benefits. That’s why these kinds of accounts are highly recommended for small business checking. Some of the benefits of having a business account with interest include:

  • Profit: With interest business checking, you can put your money to work for you. Having an interest-bearing checking account provides you with an opportunity to grow the money you have already earned. You can then reinvest this money into your business, giving you the opportunity to continuously improve your financial stability.
  • Flexibility: To earn interest, certain financial institutions may limit your withdrawals. This can make it difficult to access your money. With an interest-bearing checking account, you can withdraw your money whenever and wherever you like. Any money you don’t spend will have the ability to earn interest.
  • No Fees: Many interest-bearing checking accounts offer little to no fees when you open an account. You also want to limit the amount of monthly fees you expose your business to. Having a free or low-fee checking account allows you to grow your finances at no cost and bank on your terms.
  • Access: An interest business checking account can provide you with access to other financial benefits. These include including online banking, mobile apps, overdraft protection, merchant card services, cash management tools, financing solutions, and more.

What is APY?

The Annual Percentage Yield (APY) is the real rate of return on your balance. It takes into account the effect of compounding interest. APY rates vary depending on which financial institution you open your account through. Some interest business checking accounts will accrue more interest than others.

By opening an Innovator Business Checking Account, you can earn up to 2.25% APY. This is higher than the national average rate.

What makes a good APY?

When choosing the best APY for your business, consider any limits on how much interest you can earn. Some accounts have tiered interest rates, meaning you may start at a higher APY, but the percentage will go down as your balance increases. Certain financial institutions may also limit how much money can gain interest. For businesses with higher account balances, a portion of your money will not be utilized or included in the calculation of interest.

If you don’t want to limit your potential to earn interest, it’s best to look for an interest-bearing account with unlimited APY. Unlimited APY allows you to earn interest on your account balance, regardless of how high it may get. This is why accounts such as Innovator Business Checking are the best for small businesses.

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