Business confidence appears to be up at the moment and the official cash rate appears to be down and possibly reducing further. So how does this translate in relation to business deposit rates?

It is a while now since the official cash rate (OCR) was anywhere near “high”; 7.25% is the highest the cash rate has been over the past decade and that was back in 2008. The cash rate is currently sitting at 1.75% with talk of further rate reductions in the near future.

Interest rates that are trending downwards are not good news for those with deposit accounts – although it does make the cost of business borrowing cheaper.

Graph of the Cash Rates

Source: RBA

 

The currently low official cash rate translates into correspondingly low business deposit account rates. Currently on CANSTAR’s database, the minimum, maximum and average business deposit account rates are as follows:

1st July 2016
Min Base Rate (%) MAX Base Rate (%) AVERAGE Base Rate (%)
Business Saver 0.70 2.30 1.66
Business Cash Manager 0.25 1.90 1.04
Business Transactors 0.00 1.75 0.06

Source: CANSTAR. Based on business products listed on CANSTAR database.  Does not include all products in the market.

As can be seen from the table above, the maximum interest rates on offer are significantly better than the average.  The base rates above are on a balance of $50,000 for Business Saver and Cash Managers and $10,000 for Business Transactors. The average rate is taken across the accounts that offer a rate.

Business vs Personal interest rates

Sadly for business owners, business deposits accounts pay a lower average – and maximum – rate of interest when compared to personal accounts.

The average figures, as seen in the table below, are based on a balance of $50,000 for Saver and Cash Manager accounts and $10,000 for Transactors. The average rate is taken across the accounts that offer a rate.

Business Personal
Min Base Rate (%) MAX Base Rate (%) AVERAGE Base Rate (%) Min Base Rate (%) MAX Base Rate (%) AVERAGE Base Rate (%)
Saver 0.01 2.30 1.46 0.00 3.00 1.58
Cash Manager 0.25 1.90 1.04 0.00 2.15 0.91
Transactors 0.00 1.75 0.06 0.00 2.00 0.06

Source: CANSTAR. Based on business products listed on CANSTAR database.  Does not include all products in the market

With interest a threatened species in some deposit accounts, it?s even more important than ever to ensure the type of account you choose has the best features to suit the way your business banks. CANSTAR has researched and rated 83 business deposit products from 38 providers to determine which accounts offer outstanding value for businesses. You can compare business savings accounts here and compare business transaction accounts here.

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