Why do business savings accounts get such rubbish interest?
Discussion
I get about 5.6% and that took some hunting. On my personal cash, I get 6.35. I've got far more in the business savings account as I would assume most people do and I would have thought that the banks would fight harder for business savings account than personal ones and hence give better rates.
Its competiton and market forces.
What you are getting is actually a good rate in comparision to a bunch of places.
Why do personal accounts offer better rates? Because personal savers are more likely to move their money around to a different bank if they would gain more interest. Therefore there is more competition and to get customers they choose to offer a better rate.
With business accounts they weight up the much smaller chance that a business owner will want to change banks with the fact that they are getting a good margin themselves on the lower rate.
What you are getting is actually a good rate in comparision to a bunch of places.
Why do personal accounts offer better rates? Because personal savers are more likely to move their money around to a different bank if they would gain more interest. Therefore there is more competition and to get customers they choose to offer a better rate.
With business accounts they weight up the much smaller chance that a business owner will want to change banks with the fact that they are getting a good margin themselves on the lower rate.
I think it also had something to do with businesses not really saving if you know what I mean.
For example, I keep a bit of a cash reserve for eventualities. But if I was to need something for the business representing a big capital expense, I wouldnt treat it like I do in my personal life and save up, I'd take the hit and arrange finance through a loan as waiting isnt that likely to be an option.
Just thinking out loud, also I agree with the above, its a lot more hassle to move your business account for a few percent extra than your personal account.
Think some of the guys I contract with stick their corp tax etc in their offset mortgages whilst waiting for the due date. Beats most savings rates.
For example, I keep a bit of a cash reserve for eventualities. But if I was to need something for the business representing a big capital expense, I wouldnt treat it like I do in my personal life and save up, I'd take the hit and arrange finance through a loan as waiting isnt that likely to be an option.
Just thinking out loud, also I agree with the above, its a lot more hassle to move your business account for a few percent extra than your personal account.
Think some of the guys I contract with stick their corp tax etc in their offset mortgages whilst waiting for the due date. Beats most savings rates.
CIS121 said:
emicen said:
Think some of the guys I contract with stick their corp tax etc in their offset mortgages whilst waiting for the due date. Beats most savings rates.
Doesn't this have tax implications as you're effectively getting a Director's loan?David_s said:
CIS121 said:
emicen said:
Think some of the guys I contract with stick their corp tax etc in their offset mortgages whilst waiting for the due date. Beats most savings rates.
Doesn't this have tax implications as you're effectively getting a Director's loan?edb49 said:
David_s said:
CIS121 said:
emicen said:
Think some of the guys I contract with stick their corp tax etc in their offset mortgages whilst waiting for the due date. Beats most savings rates.
Doesn't this have tax implications as you're effectively getting a Director's loan?Using your corp tax slush fund as offset for your mortgage should be taxed as a BIK but I'm pretty sure most deal with that if/when they get caught at it.
emicen said:
edb49 said:
David_s said:
CIS121 said:
emicen said:
Think some of the guys I contract with stick their corp tax etc in their offset mortgages whilst waiting for the due date. Beats most savings rates.
Doesn't this have tax implications as you're effectively getting a Director's loan?Using your corp tax slush fund as offset for your mortgage should be taxed as a BIK but I'm pretty sure most deal with that if/when they get caught at it.
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