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Best of

The Best 3-Month CD Rates

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

If you have some extra cash looking for a quick return, a 3-month certificate of deposit (CD) could be the handy savings tool you’ve been looking for. CDs with a 3-month term are typically the shortest CD offerings available. Because they’re such brief investments, 3-month CDs also tend to earn at pretty low interest rates. In fact, the average return on a 3-month CD in May was only 0.49% APY.

However, low 3-month CD rates are far from being an inescapable destiny. In order to compete for customers, some banks end up offering really great rates on short-term CDs. This competition can be a big advantage if you know where to look. And we know where to look: Read on to see the best CD rates for 3-month terms.

We ranked the following products by highest APY available nationwide, using data from DepositAccounts.com, another LendingTree-owned company. We also took minimum deposit requirements into consideration to ensure wider availability for customers. Finally, we checked each account’s early withdrawal penalty, as 3-month CD penalties can take a larger chunk of your earnings out than other terms.

The best 3-month CD rates

Institution

APY

Minimum deposit amount

Virtual Bank

2.16%

$10,000

Third Federal Savings and Loan

2.15%

$500

First Internet Bank

2.12%

$1,000

NexBank

2.10%

$10,000

Popular Direct

2.05%

$10,000

Bethpage FCU

2.00%

$50

Spectrum Credit Union

1.95%

$500

CD Bank

1.90%

$10,000

USALLIANCE Financial

1.75%

$500

Bellco Credit Union

1.60%

$500

Virtual Bank — 2.16% APY, $10,000 minimum deposit

To snag the highest 3-month CD rate, you’ll need at least $10,000 as an opening deposit for a Virtual Bank 3-Month eCD. The penalty for making an early withdrawal from a 3-Month eCDis 100% of the interest earned on the amount withdrawn, negating any earnings you may have received.

Virtual Bank is a digital division of IBERIABANK, which was founded in New Iberia, La. way back in 1887.

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on Virtual Bank’s secure website

Member FDIC

Third Federal Savings and Loan — 2.15% APY, $500 minimum deposit

Third Federal Savings and Loan offers a great deal on its 3-Month Special CD. You can start growing your money at a competitive rate, comparable to many longer-term CDs, for a minimum deposit of only $500. Just be careful of making an early withdrawal from the account, as you’ll lose one month’s worth of interest.

Third Federal Savings and Loan Association first opened in Cleveland in 1938, where it is still based today.

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on Third Federal Savings And Loan (OH)’s secure website

Member FDIC

First Internet Bank — 2.12% APY, $1,000 minimum deposit

You can get started with a First Internet Bank 3-Month CD with $1,000. The early withdrawal penalty associated with this account will equal 90 days’ interest.

Like its name suggests, First Internet Bank was the first FDIC-insured institution to operate entirely online from its founding in 1999.

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on First Internet Bank’s secure website

Member FDIC

NexBank — 2.10% APY, $10,000 minimum deposit

NexBank Certificates of Deposit earn at some great rates, especially its 3-month CD. NexBank requires a pretty high opening deposit of $10,000. CD balances must max out at $240,000. The penalty for an early withdrawal will equal one month’s worth of interest.

In addition to its CDs and other personal deposit accounts, NexBank focuses largely on commercial banking, mortgage banking and institutional services. It was established in 1934 and is based in Dallas.

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on NexBank’s secure website

Member FDIC

Popular Direct — 2.05% APY, $10,000 minimum deposit

Popular Direct offers another high rate for a 3-Month CD if you have $10,000 to deposit. Interest compounds daily on this account. Just be careful about making an early withdrawal, as you’ll lose almost all of the interest you earned; the early withdrawal penalty equals 89 days’ simple interest.

Popular Direct is a division of Popular Bank, which is a New York state-chartered bank and provides FDIC insurance for your Popular Direct deposits. Popular Direct is headquartered in New York City.

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on Popular Direct’s secure website

Member FDIC

Bethpage FCU — 2.00% APY, $50 minimum deposit

With competitive rates on all its Certificates, the Bethpage FCU 3-Month Certificate is no exception. It’s the last rate on our list in the 2% range. Plus, you only need $50 to open an account, so it’s easier to get started. The penalty for an early withdrawal from this account is 90 days’ worth of dividends on the principal amount withdrawn.

Bethpage FCU first opened in 1941 to serve Grumman employees. Based in Bethpage, N.Y., the credit union also offers customers access to thousands more branches and ATMs throughout the country through the CO-OP Network. Bethpage FCU opens membership up to anyone; you just need to open a Bethpage savings account and fund it with $5 to become a member.

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on Bethpage Federal Credit Union’s secure website

NCUA Insured

Spectrum Credit Union — 1.95% APY, $500 minimum deposit

To open a Spectrum Credit Union 3-month Share Certificate, you’ll need at least $500 to deposit. After that, all balances can earn at the given rate. Making an early withdrawal from the 3-month Share Certificate will charge a penalty of three months’ worth of dividends.

Spectrum Credit Union was founded in 1973 originally as Bechtel Employees Federal Credit Union. It is a division of Chevron Federal Credit Union (CFCU), a California-based credit union that was established in 1935. Spectrum membership is available to a variety of customers including employees of select companies, residents of select San Francisco and Maryland neighborhoods. You can also become eligible for Spectrum Credit Union membership by joining one of its partner nonprofit associations.

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on Spectrum Credit Union’s secure website

NCUA Insured

CD Bank — 1.90% APY, $10,000 minimum deposit

As is the case with all its accounts, CD Bank also offers a pretty competitive rate on its 3-Month CD. You’ll need at least $10,000 to open and start earning interest, which is credited semi-annually. Making a withdrawal from this CD before maturity will cost you three months’ worth of interest on the amount withdrawn.

CD Bank offers only CD accounts. It is an online division of Dallas-based TBK Bank, which is a subsidiary of Triumph Bancorp, Inc.

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on CD Bank’s secure website

Member FDIC

USALLIANCE Financial — 1.75% APY, $500 minimum deposit

USALLIANCE Financial’s 3-Month Certificate Account requires at least $500 to open for you to start earning at its solid interest rate. For such a short term, the penalty for an early withdrawal is pretty high, charging 180 days’ dividends on the amount withdrawn.

USALLIANCE Financial was founded in 1966 by IBM employees. No longer limited to IBM, USALLIANCE Financial membership is open to select companies and their employees, neighborhoods and locations, places of worship, schools and organizations.

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on USALLIANCE Financial’s secure website

NCUA Insured

Bellco Credit Union — 1.60% APY, $500 minimum deposit

Bellco Credit Union offers a handful of high-yield CDs, including its shortest term 3-Month Regular CD. It requires at least $500 to open. The penalty for an early withdrawal from this account equals 30 days’ interest on the amount withdrawn.

Bellco Credit Union was founded in 1936 and is based in Colorado. You are eligible for Bellco membership if you live in a select Colorado county, work for a Bellco Select Employee Group, are affiliated with Consumers United Association or have a family member who is a Bellco member. For out-of-state folks, you can also join the Bellco Foundation for $10.

Learn more Secured

on Bellco Credit Union’s secure website

NCUA Insured

Short-term CDs vs. long-term CDs: Which are better investments?

Both short-term and long-term CDs are great investment tools, although they serve different purposes depending on your savings goals. Long-term CDs are better for saving for goals years in the future. They also help you lock in high rates for years to come to protect against a rate-dropping climate.

Short-term CDs, on the other hand, are better when you have some extra cash you need to stash away for a bit. You can take advantage of high rates, but there is the inherent risk that in three or six months, that rate may have gone down. On the flip side, a short-lived term allows you to take advantage of rising rates more quickly.

A CD alternative that would still allow you some flexibility in catching rising rates would be to open no-penalty CDs instead. Like their name suggests, no-penalty CDs allow you to avoid the typical early withdrawal penalty associated with CDs. That way, when you start to see higher available CD rates, you can close up one CD and deposit those funds in a new, higher rate account without losing money.

Because short-term CDs expire so quickly, it might make sense to open a more liquid savings product instead. “A reasonable alternative is to just keep that money in a savings or money market account for three or six months,” suggests Ken Tumin, founder of DepositAccounts.com, a LendingTree-owned company. “In fact, the savings account rates at many internet banks are actually quite a bit higher than their 3- and 6-month CD rates.”

However, there is always the chance of your variable savings account rate decreasing without notice. So if you can open one of the best 3-month CDs above, the returns could be worth locking away your money for a few months.

Starting off a mini CD ladder with a 3-month CD

Many CD ladder guides suggest building a ladder starting with a 1-year CD. That technique results in CDs that mature every year. But you can also just as easily kick off a CD ladder with 3-month CDs. That would allow for more frequent maturity dates. For example, you could start a ladder with 3-month, 6-month, 9-month and 12-month CDs. When the 3-month, 6-month and 9-month CDs mature, you would renew each one into a 12-month CD. The steady state of the ladder would then be just 12-month CDs that mature every three months.

You can also create a ladder with longer-term CDs that still mature every three months. In this case, it’s a little more complicated when starting the CD ladder. In sticking with the example above, you could also open a 24-month and 36-month CD at the outset. After several rollovers into various terms over the next few years, the ladder’s steady state would have a 36-month CD maturing every 3 months. This could be an ideal way to take advantage of high rates now while also leaving some room for higher rates in the future. It also offers opportunities for you to receive a payout every three months.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Lauren Perez
Lauren Perez |

Lauren Perez is a writer at MagnifyMoney. You can email Lauren here

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Best of

The Best 5-Year CD Rates in 2019

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Five-year CDs offer some of the highest savings interest rates available. In exchange for keeping your money on deposit for half a decade, banks are willing to dole out higher returns on these long-term accounts. For example, in May, the average 1-year CD interest rate is 1.38% APY and the average 3-year CD rate is 1.86% APY, compared to the average 5-year CD rate of 2.24% APY.

Longer-term CDs do exist, but even their yields don’t often exceed 5-year CD rates these days. The highest yield on a CD of six or more years is 3.45% APY, though the next best rate comes in at 3.25% APY. 5-year CDs are also useful components to a CD ladder. When you build a ladder with CDs maturing a year apart, you can renew each one into a 5-year CD at maturity. This locks in the higher long-term rates for years to come.

To make sure you’re getting the best CD rates, MagnifyMoney has uncovered the highest 5-year CD rates available nationwide. Using data from DepositAccounts.com, similar to MagnifyMoney, a LendingTree owned company, we found that the best 5-year CD rates earned well above the national average interest rate for 5-year CDs. We also took minimum deposit requirements into consideration, to check for wider customer availability.

The 10 best 5-year CD rates in 2019

InstitutionAPYMinimum deposit amount

First National Bank of America

3.20%$1,000

The Federal Savings Bank

3.30%$10,000

Affinity Plus FCU

3.25%$500

Main Street Bank

3.25%$500

Sun East FCU

3.25%$500

Tampa Bay FCU

3.25%$500

Presidential Bank

3.25%
$1,000

Superior Choice Credit Union

3.25%$10,000

Georgia Banking Company

3.20%$500

Citizens State Bank

3.20%$1,000

First National Bank of America — 3.20% APY, $1,000 minimum deposit

At the top of the list is First National Bank of America with its high-yield 60 Months CD. It requires a minimum opening deposit of $1,000.

First National Bank of America was first founded in 1955 as First National Bank of East Lansing, becoming the name we know today in 1998. The family-owned company is based in Michigan and has three branches in the state.

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on First National Bank Of America’s secure website

Member FDIC

The Federal Savings Bank — 3.30% APY, $10,000 minimum deposit

To earn the highest rate on this list, you’ll need at least $10,000 to spare, as this is the minimum opening deposit required to open a Federal Savings Bank 5-year CD. The penalty for an early withdrawal from this account equals one year of interest.

Established in 2000, the Federal Savings Bank is veteran-owned and focuses heavily on mortgage lending throughout all 50 U.S. states. It has two retail banking branches in the Chicago area.

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on The Federal Savings Bank’s secure website

Member FDIC

Affinity Plus FCU — 3.25% APY, $500 minimum deposit

To start earning at Affinity Plus FCU’s competitive rate on a 60-month basic certificate, you’ll need an opening deposit of at least $500. Early withdrawals from this account may trigger a penalty of 365 days’ worth of dividends.

Your Affinity Plus FCU membership eligibility depends on the organization where you’re employed or volunteer, your school or place of residence, work or worship or through eligible/current members; you can also easily join by making a one-time $25 donation to the Affinity Plus Foundation. Affinity Plus Federal Credit Union was founded in 1930 and is currently headquartered in St. Paul, Minn.

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on Affinity Plus Federal Credit Union’s secure website

NCUA Insured

Main Street Bank — 3.25% APY, $500 minimum deposit

Main Street Bank offers a great rate on its 60-month CD (and its 3-year CD) for a low minimum deposit of $500. An early withdrawal from this account will land you a penalty of 180 days’ worth of interest.

Founded in 2005, Main Street Bank is headquartered in Bingham Farms, Mich., and has a few branches in the Detroit area.

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on Main Street Bank (MI)’s secure website

Member FDIC

Sun East FCU — 3.25% APY, $500 minimum deposit

At Sun East FCU, you only need $500 to start saving through a 60-month certificate of deposit. Plus, Sun East insures your deposits up to $500,000. The penalty for early withdrawals will depend on when during the term you make your withdrawal, according to Sun East FCU customer service.

Founded in 1949 by Sun Oil Company employees, Sun East serves members throughout Delaware, Pennsylvania and New Jersey. Sun East FCU membership depends on your place of residence, family members, employer or community, though you can also join with a $10 donation to the Sun East Charitable Foundation.

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on Sun East Federal Credit Union’s secure website

NCUA Insured

Tampa Bay FCU — 3.25% APY, $500 minimum deposit

You can earn Tampa Bay FCU’s high 60-month share certificate rate on all balances starting at $500. The penalty for making an early withdrawal from this account will be six months of last dividends earned.

Tampa Bay Federal Credit Union was founded in 1935 by City of Tampa workers and was originally called Tampa City Employees Credit Union. Today, membership at Tampa Bay FCU is open to employees at select companies, select association members and members/residents of certain areas and organizations. You may also qualify through a current member or by joining Prime Time Club with a one-time, non-refundable $5 fee.

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on Tampa Bay Federal Credit Union’s secure website

NCUA Insured

Presidential Bank — 3.25% APY, $1,000 minimum deposit

You’ll need a slightly higher minimum deposit to open a Presidential Bank CD which requires at least $1,000. The bank will assess a penalty of 24 months’ worth of interest on any early withdrawal you make from its 5-year CD — the largest penalty listed here.

Presidential Bank was founded in 1985. Its main office is located in Bethesda, Md., with a handful of branches in the Washington, D.C. metro area.

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on Presidential Bank (MD)’s secure website

Member FDIC

Superior Choice Credit Union — 3.25% APY, $10,000 minimum deposit

While you only need $2,500 to open a Superior Choice Credit Union 5-year share certificate, you’ll need at least $10,000 to earn at its most competitive rate. All other balances will earn at a lower APY. According to Superior Choice Credit Union customer service, making an early withdrawal from this account will result in a percentage of your balance being charged as a penalty, including accrued interest.

Superior Choice Credit Union was established in 1932. It has a handful of branches in near its Superior, Wisc., headquarters, including one in nearby Duluth, Minn. You can also access over 30,000 fee-free ATMs and 5,000 branches nationwide and in Canada through the CO-OP Network.

learn more Secured

on Superior Choice Credit Union’s secure website

NCUA Insured

Georgia Banking Company — 3.20% APY, $500 minimum deposit

Georgia Banking Company’s 5-year certificate closes out our list. You’ll need a $500 minimum deposit to start earning at the given interest rate. The bank’s early withdrawal penalty equals six months interest.

Georgia Banking Company was established in 1998, and currently has two branches in the Atlanta metro area.

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on Georgia Banking Company’s secure website

Member FDIC

Citizens State Bank — 3.20% APY, $1,000 minimum deposit

To get started with one of Citizens State Bank’s handful of Certificates of Deposit, including its high-yield 60 Month Term, you’ll need to deposit at least $1,000. The penalty on an early withdrawal from a 60 Month Term CD will equal 12 months interest on the amount withdrawn.

Chartered in 1958, Citizens State Bank offers its products nationwide through its virtual banking platform, CSBdirect.com. The bank is headquartered in Perry, Fla. and offers its nationwide customers convenient online, mobile and widespread ATM access.

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on Citizens State Bank (FL)’s secure website

Member FDIC

5-year CDs vs. savings accounts

If you’re simply looking for the highest rates available, 5-year CDs are going to seem much more appealing than a savings account. Even the best savings accounts can’t quite reach the 5-year CD rates you’ll find above. Plus, 5-year CDs lock in their rates at opening for the term of the investment, guaranteeing your rate of return. This can make for a great savings vehicle for conservative investors, who don’t want to ride the waves of an ever-changing economy.

Looking at the numbers, a $5,000 deposit into a 5-year CD at 3.25% APY (the most common rate in our list) would result in $882 of extra savings at maturity. Meanwhile, making a $5,000 deposit into one of the best savings accounts at 2.25% APY lands you with nearly $595 in savings after five years.

Savings accounts do provide easier access to your money, though. If you find yourself in a pinch suddenly, you can make a quick ACH transfer online or a withdrawal at a branch or ATM. Withdrawing from CDs isn’t as easy, especially when you account for the money you’ll lose to early withdrawal penalties. As you can see from the accounts above, early withdrawals from a 5-year CD can result in the loss of six months’ to two years’ worth of interest.

5-year CDs vs. other investment options

Investing in individual bonds — Treasury, municipal, or corporate — can be a solid alternative to saving with 5-year CDs. Non-Treasury bonds do have some risk by default as they don’t have the FDIC/NCUA insurance coverage limits. You can use these bonds to build a ladder similar to a CD ladder, so each bond matures a year or so apart.

An alternative to creating a bond ladder is to invest in a mutual fund or ETF of bonds. Unlike a ladder, however, the value of a bond mutual fund or ETF does fluctuate with interest rates. So when interest rates go up, the value of those investments will drop and vice versa.

The best way to maximize your 5-year CD investment

If you’re putting away money for five years, you’re going to want to make it worthwhile. For starters, CDs are best for those who have already maxed out their other savings accounts and have their emergency savings in a liquid savings account for easy access. They’re also better if you have a higher deposit to stash away. That will earn more interest in the long term for more tangible savings.

For example, placing $1,000 in a 5 year CD with a 3.25% APY will yield about $176 in savings by the end. Making a $10,000 deposit, on the other hand, lands you with a little over $1,764 in interest. That $176 is a good chunk of change, but you should make sure it’s enough to justify stashing away $1,000 now instead of perhaps waiting to make a larger deposit.

A great way to utilize a 5-year CD is to include it in a CD ladder. A 5-year, five-CD ladder is a standard and easy-to-track method of saving. You open five CDs, each maturing a year apart. Once a CD matures, you renew it as a new 5-year CD. Eventually, all your CDs will be 5-year accounts, maturing a year apart. You can also choose to withdraw your money whenever an account matures if you need to use those funds. This allows you to take advantage of the longer terms’ higher rates and bigger savings.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Lauren Perez
Lauren Perez |

Lauren Perez is a writer at MagnifyMoney. You can email Lauren here

TAGS:

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Best of

The Best Business Money Market Accounts of May 2019

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

You’ve poured your heart and soul into the small business you founded, but when it comes to financing day-to-day operations, you’ll need to strictly separate your personal wealth from your business funds. A business money market account can help provide a safe place for your company’s cash, allowing it to earn relatively high interest while still remaining liquid enough to take care of business expenses.

Scouring our database for the business money market accounts earning the highest APY (and are available nationwide), we’ve come up with the best places for you to place the money that funds your dream.

The best business money market accounts

InstitutionAPYMinimum balance to earn APYMaximum balance to earn APY

Bay State Savings Bank

2.35%$5,000None

Affinity Federal Credit Union

2.25%$25,000None

First Internet Bank

2.02%$100None

Bethpage Federal Credit Union

2.00%$500None

nbkc bank

1.77%None


1.25% APY on balances over $1.0 million

Primary Bank

1.11%None

0.55% APY on balances over $500,000

Bay State Savings Bank — Smile Worcester County Commercial Money Market Account

Based in Worcester, Mass., this bank has more than a century of experience meeting its customers’ financial needs, and offers the best business money market account currently available nationwide. With an APY of 2.35%, the Smile Worcester County Commercial Money Market Account will spread joy to business owners across the country, and it offers other benefits as well, including:

  • Free access to Bay State Savings online banking
  • Free online bill pay
  • ATM transactions via a Mastercard debit card
  • Telephone banking

To open this account, you need to make a minimum deposit of $5,000, the same amount you need to maintain in the account in order to avoid a $7 monthly maintenance fee — the good news is that there’s no minimum balance needed to earn the high APY.

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on Bay State Savings Bank’s secure website

Member FDIC

Affinity Federal Credit Union — Business Money Manager Account

Being a credit union, Affinity requires you to become a member before you can open an account, including the Business Money Manager account. One way anyone can join is by making a $5 donation to the New Jersey Coalition for Financial Education or the Connecticut Jump$tart Coalition.

This account actually has two tiers of APY, based on the balance you maintain. A balance from $1,000 to $24,999 earns an APY of just 1.25%, while balances of $25,000 and up earn 2.25%. You do need at least $1,000 in order to open this account, and you’ll get hit with a $10 monthly fee for that month if the average daily balance falls below $1,000 on any given day.

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on Affinity Federal Credit Union’s secure website

NCUA Insured

First Internet Bank — Business Money Market Savings account

This online-only bank has a real knack for offering customers competitive rates with its money market accounts, and its business product doesn’t stray from the pattern. Account holders can expect an APY of 2.02%, one of the highest available nationwide, so long as they make the minimum deposit of $100 to open the account. There’s no minimum balance needed to earn the APY, but a $5 monthly fee will be charged by First Internet Bank if the average daily balance for that month falls below $4,000.

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on First Internet Bank’s secure website

Member FDIC

Bethpage Federal Credit Union — Business Money Market Account

A credit union based in Bethpage, N.Y., this financial institution has aggressively raised the APY on this account from a modest 0.5% APY in February 2018 to the current 2.00% depositors can expect to earn today. The most accessible and easiest way to join this credit union for everyone in the country is to simply open a special $5 savings account that makes you a member able to open the product you really came here for — the Business Money Market Account.

With a minimum deposit of $500, customers opening this account earn the full APY of 2.00% on the entire balance. While there’s no minimum balance required for this APY, customers will be charged a $20 monthly fee for not having an average daily balance of at least $2,500. You’ll also have to pay a $10 fee for each withdrawal you make from the account once you go over your limit of 6 free withdrawals per month.

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on Bethpage Federal Credit Union’s secure website

NCUA Insured

nbkc bank — Business Money Market Savings account

This Kansas-based bank offers a decent interest rate on its Business Money Market Savings account. With a minimum deposit of $5, you can open this account and start earning 1.77% APY on balances up to $1,000,000. The portion of your balance exceeding $1,000,000 will earn a still respectable APY of 1.25%

While nbkc charges very little in terms of fees, keep in mind the six withdrawal per month limit on money market accounts stems from federal regulations and isn’t subject to the whims of individuals financial institutions. If you need to access your money more frequently, you may want to consider supplementing your money market account with a business checking account (see more below).

Learn More Secured

on nbkc bank’s secure website

Member FDIC

Primary Bank — Choice Business Money Market account

A relative newcomer to the banking scene, Primary Bank established itself in 2015 in Bedford, N.H. But don’t let its youth put you off — according to DepositAccounts.com (which similar to MagnifyMoney, is owned by LendingTree), it’s one of the healthiest banks in the country and its Choice Business Money Market account makes for a compelling option to place some of your business funds.

This account earns an APY of 1.11% on balances ranging from a penny to $500,000. Balances higher than that only earn 0.55% APY, a disappointing number when compared to some of the other APYs on this list. It also requires a minimum deposit of $10,000 to open. Still, the APY is one of the higher ones out there in the market and worth a look if the other financial institutions on this list aren’t to your liking.

Learn More Secured

on Primary Bank’s secure website

Member FDIC

Business money market accounts vs. business savings accounts

Since both business money market accounts and business savings accounts earn a comparatively high interest rate and give you a place to deposit your business funds separate from your personal money, how should you go about choosing between the two products? While nothing is wrong with a business savings account, money market accounts hold two distinct advantages over them:

  • Higher APYs: While not true across the board, money market accounts earn higher interest than savings accounts in general. For example, looking at the rate tables at DepositAccounts.com, the business savings account available nationwide with the highest APY is Primary Bank’s Premium Business Statement Savings Special, with 2.00%. When compared to the APYs listed above, the majority of which are either at 2.0% and above, it’s clear that business money market accounts still earn higher rates.
  • Easier Access to Funds: Business savings accounts don’t generally come with a debit card or checks to help depositors withdraw their funds from the account. While these features aren’t universal with business money market accounts, they’re more prevalent (the nbkc Business Money Market Savings Account and the First Internet Bank Business Money Market Savings account on this list are two examples of accounts with these perks). However, both money market accounts and savings accounts fall under the jurisdiction of the Federal Reserve Board’s Regulation D, which only allows a maximum of six withdraws from the account each month.

Business money market accounts vs. CDs or checking accounts

While a business money market account earns a high APY and — if it comes with perks such as online banking, checks and/or a debit card — allows easy access to funds, it can’t have the same liquidity as a checking account. For regular business expenses you need to pay with any sort of frequency, you’ll need a checking account from which you’ll pay vendors, staff, etc. However as with personal checking accounts, don’t expect to earn a high APY.

Certificates of deposits (CDs) are the most restrictive product in terms of liquidity — unless you’re dealing with the relatively-rare CD, which incurs no penalty for early withdrawals, the money you’ve deposited is untouchable until the certificate matures. However, CDs do have the advantage of locking in your money at fixed interest rates (whereas the bank can change how much interest the money in a money market or savings account earns whenever it wants) and earning the highest APY.

Why you need to separate your business and personal banking

There’s nothing explicitly stopping you legally from funding your business with your personal money, but doing so is generally frowned upon for the following reasons:

  • You remove any legal distinction between you and your business: To paraphrase a certain businessman-turned presidential candidate, “Corporations are people too.” This becomes more than a campaign slogan when you’ve mingled your personal and business finances and someone successfully sues your business. If a court takes a look at your books and determines there’s no real distinction between your business’s finances and your personal wealth, they can include your own money in any damages that have to be paid.
  • The IRS won’t let you deduct expenses: Even though you consider your Etsy shop a budding corporate empire, the IRS has its own definition of what constitutes a business versus what’s a hobby that makes you money — and changes what you can deduct based on its decision. One of the first criteria the IRS lists is “Whether you carry on the activity in a businesslike manner and maintain complete and accurate books and records” (emphasis ours). Having separate accounts goes a long way toward proving your hobby is actually a legitimate business.

What do I need to open a Business Money Market Account?

While the exact materials and information needed to open one of these accounts varies by institution, you should probably have on hand the following information when you’re ready to open an account:

  • Employer Identification Number (this is a nine-digit number you receive after applying to the IRS which, if you own a business, you probably already have).
  • A legal document indicating when the business was formed
  • Your own social security number or government-issued ID

You may need additional information depending on how your company is structured (if you aren’t the sole proprietor, for example, you’ll probably need to provide ownership papers to the bank), but the above is a good place to start when gathering the materials you’ll need to open one of these accounts.

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James Ellis
James Ellis |

James Ellis is a writer at MagnifyMoney. You can email James here

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