Many businesses have idle cash sitting in their accounts, which is a great reason to start exploring commercial bank fixed deposit rates.
In fact, fixed deposits are one of the basic corporate banking solutions that almost all businesses should be considering.
In this article, we’ll share how fixed deposits can be laddered to provide cash flow protection, access to your money, and consistent returns.
Feel free to use the table of contents to jump ahead to the sections that are most relevant to you.
Table of Contents
- Commercial Bank Fixed Deposit Rates 101
- Fixed Deposit Rates in Commercial Banks
- Can a Corporate Company Benefit From Fixed Deposit Rates?
- Ready to Open a Business Bank Account?
Commercial Bank Fixed Deposit Rates 101
Let’s start by discussing the obvious, businesses need access to the cash they keep in their bank accounts, which is why they don’t use it for longer term investments.
But, in most cases, businesses don’t need access to all of their cash immediately. Instead, they need different levels of cash over different periods of time.
For example, a business may want access to a certain amount of cash for the next two months and a different amount over the next three to six months.
In a scenario like this, many businesses choose to use a fixed deposit laddering strategy. This essentially means that a business’ cash is placed into fixed deposits of varying terms and rates.
In short, the goal of using commercial bank fixed deposit rates like this is to ensure your business always has access to the capital it requires while also keeping your business’ capital growing (or at least keeping pace with inflation).
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Fixed Deposit Rates in Commerical Banks
Generally speaking, the longer you are willing to keep your deposit fixed with the bank, the higher the interest rate will be. Likewise, higher deposit amounts also tend to receive higher interest rates, though there are exceptions.
Of course, if you are looking at international banking, you may find that different currencies also receive higher interest rates – depending on which country you are banking in.
With this in mind, here are several examples of commercial bank fixed deposit rates that you will find at a popular US bank. In this example, the rates will be shared for a $50,000 deposit at each of the term lengths.
- 1 month: 0.01%
- 2 months: 0.01%
- 3 months: 0.1%
- 4 months: 0.1%
- 5 months: 0.1%
- 6 months: 0.2%
- 7 months: 0.2%
- 8 months: 0.2%
- 9 months: 0.2%
- 10 months: 0.2%
- 11 months: 0.2%
- 12 months: 0.3%
Again, the rates increase if your business is able to deposit more than $50,000. And, in certain countries you can access significantly higher deposit rates (between 5% and 10% in certain instances).
Can a Corporate Company Benefit From Fixed Deposit Rates?
As mentioned above, corporate entities can benefit from fixed deposits by maintaining their cash in near term instruments (fixed deposits), while continuing to generate a return.
This is often used as an effective way to generate a return on idle cash that is sitting in corporate bank accounts.
In other words, commercial bank fixed deposit rates offer a way for corporations to continue generating shareholder return while being fiscally responsible with respect to short term capital requirements.
Ready to Open a Business Bank Account?
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