How to Choose the Best Certificate of Deposit for Business

Running a business isn't easy, and managing business finances can be even harder. But what if we told you there's a way to grow your money without lifting a finger? Enter the business certificate of deposit (CD). It's a financial game-changer for businesses of all sizes. Keep reading—this guide provides everything you need to know about business CDs and how to choose the best option for your business needs.

What is a Business Certificate of Deposit?

A business CD is a savings product offered by banks or credit unions created specifically for businesses. It allows a business to deposit a fixed amount of money for a set period of time, typically ranging from a few months to several years. In return, you earn interest at a higher rate than a regular business savings account.

While business CDs and personal CDs share many similarities, business CDs often come with features tailored to meet the needs of businesses. These might include A) higher interest rates for larger deposits or B) flexible terms suited to business cash flow cycles.

Learn more about the basics of business CDs in our previous article: What is a Business Certificate of Deposit (CD) and How Does It Work?

Factors to Consider When Choosing a Business CD:

When exploring business CDs, it's important to evaluate some key factors to ensure everything aligns with your financial needs. Consider asking yourself questions about interest rates, deposit terms, and penalties to make an informed decision for your business.

What are the CD Interest Rates and Compounding Options?

Generally, higher interest rates translate to more money in your pocket, but you should also consider factors like the Annual Percentage Yield (APY) and compounding frequency. The APY on a CD gives you a clear picture of how much you can expect to earn over time, factoring in both the interest rate and the effects of compounding. Compounding frequency matters too. The more often it happens, the bigger your returns can get, helping your money grow faster and work harder for your business.

What are the Deposit Terms and Requirements?

Banks offer a wide range of CD terms, spanning from 30 days to 60 months. Consider how long you can afford to lock away a portion of your business savings. Some CDs have minimum deposit requirements, so make sure to choose one that fits your budget.

Are there Early Withdrawal Penalties?

Most CDs impose penalties if you take out your money before the term ends. These penalties can range from a few months’ worth of interest to a year’s worth. Evaluate your business's cash flow needs and choose a time frame that won’t tempt you to make early withdrawals.

How to Compare and Select the Best Business CD

1. Research Options from Different Financial Institutions: Start by looking into various banks and credit unions. Compare their interest rates, terms, and conditions. As mentioned, each financial institution will offer its own promotion with special CD rates for various term lengths.
2. Choose Institutions that are Insured: Make sure the bank or credit union you choose is financially stable. By selecting a business CD at an insured institution, you get an extra layer of security. Therefore, look for banks with FDIC insurance to keep your investment safe. A quick peek at their financial statements or customer reviews can give you a good understanding of or their reliability.
3. Know the Added Features: Financial institutions often offer business CDs with incentives like opening bonuses or higher CD interest rates under certain conditions. These features can boost earnings, but don’t forget to carefully review the terms and conditions. Stay informed about these offers and contact your bank for more details.
4. Use Financial Calculators: When selecting the best business CD, financial calculators are invaluable for making informed decisions. A Certificate of Deposit Calculator lets you evaluate CDs based on various interest rates and terms. Use a CD Ladder Calculator to spread your investments over different CD terms for better rates and easier access to your money. And if you want to learn how to calculate compound interest, a Compounding Interest Calculator helps you visualize potential earnings for your business.
5. Seek Expert Advice: If you are feeling unsure about your options, don’t hesitate to consult a financial advisor. They can provide personalized advice based on your business’s unique needs and financial situation.

Explore Academy Bank’s Top CDs for Businesses

Whether you run a small business, a startup, or a corporation, choosing the right business CD can give your business a financial edge.

As long as you understand the essentials and take time to compare your options, you can find a CD that aligns perfectly with your business goals. Remember, investing smartly today can set your business up for success tomorrow!

Ready to find a reliable option? Consider exploring business certificates of deposit from Academy Bank—they might just be the perfect fit for your financial strategy. Academy Bank's high CD interest rates and returns were recently recognized by CNN Underscored as some of the best CDs for businesses.

Take your business savings to the next level and open a business CD today!

Still looking for other top business bank accounts? Visit our business banking home page.

Member FDIC

$500 minimum opening deposit required. A penalty may be imposed for early withdrawal. CD rates are subject to change at any time and are not guaranteed until CD is opened. Fees charged to the account could reduce earnings on the account.