Business CD Accounts

Why should you get a CD for your business? Well, there are some instances where it might be appropriate for you to use a certificate of deposit as an investment vehicle for your business. For instance, if your business is generating large amounts of liquid cash that you don’t need on hand for operating expenses, it makes sense to put that money into an interest-generating account to make it work for you. That way, your profit is producing passive income for your business.

Many financial institutions offer business CD accounts as an option for their business banking customers. Generally they will require your business CD to be linked to an existing business account, usually a business checking account. Once your business CD is set up, it’s a relatively simple matter to authorize signers on your business account to transfer the money. One advantage of a business CD account is that you can authorize multiple signers to handle the deposits into your business account.

However, there are also some disadvantages to opening a business CD versus a personal CD account. Typically, business CD accounts do not have the best CD rates available, in comparison to personal CD accounts. However, smaller institutions will generally try to attract investors with the best certificate of deposit rates, because they can offer higher rates than larger institutions.

Fixed rates business CDs are the most common; however, some banks offer CDs with a “bump-up” feature, which will allow for a single readjustment of the CD’s interest rate during the term of the CD, if interest rates go higher while the owner of the CD is in the middle of their term. Other times, CDs are tied to an index such as the stock market. Shop around and check with various institutions to get the best certificate of deposit rates available to you.