Money makes a business go round, so receiving extra where you can is always a win. Interest-bearing bank accounts are one way to bring in some additional dollars.
In this article we talk about the ins and outs of business bank accounts and how they can benefit your business.
What is business banking?
Business banking, or commercial banking, refers to a brand’s dealings with a financial institution that specialises in providing financial products to businesses, rather than individuals.
Oftentimes financial institutions have separate departments or divisions dedicated to dealing with business clients, to help meet their unique needs. Their offerings can include anything from business loans and credit cards to bank accounts.
Types of business bank accounts
A business bank account keeps all your business finances in the one place, separate from your personal funds. With it, you can pay day-to-day business expenses, invoices and staff wages, as well as receive payments from clients.
If your business is structured as a partnership, company or trust, you must have a separate bank account for tax purposes. If you operate as a sole trader, you don’t need a business bank account, but it can make life easier as a business owner. If you’re looking to set up a business bank account, here’s some handy information to get you started.
Below are the main types of business bank accounts that you can put your money into.
Business transaction account
A business transaction account is designed to support your everyday business activities. No matter the size of your business, a transaction account allows you to accept payments and make payments, making it a trusty companion that keeps your business in action. Generally, business transaction accounts pay little or no interest and charge a monthly account fee.
Business savings account
If business is booming and you find yourself with extra cash, a business savings account is a place you can house it while you work out what to do with it.
As well as simply being a place to park your savings, and separate them from your operational cash, some savings accounts (term deposits) can help your money grow.
Term deposits work by locking up your surplus funds with a fixed interest rate for a certain period of time, typically 30 days to 5 years. At the end of the term, you can access your cash (plus any interest earned and subject to tax) to use how you like – reaping the rewards of your patience.
Check out the Tyro Business Term Deposit if you want to grow your business savings.
Business interest account
Want to earn interest while still being able to access your money? An interest-bearing bank account can help you do just that. There’s usually no minimum balance or deposit needed to start earning interest, making it an accessible business tool.
How does interest work with bank accounts?
How much interest you bear through a bank account depends on the interest rate that’s tied to it. The different interest rates include:
- Fixed rate: A fixed rate account pays interest on your money at a specified rate, for a specified period. This can provide certainty as you know how much interest your savings will earn over the fixed term.
- Variable rate: A variable rate account does the opposite, with the interest rate moving up or down. While there’s no guarantee as to what interest will be, a variable rate account can offer more flexibility as you can typically access your money whenever you want.
- Tiered rate: With a tiered rate, you’ll earn different rates of interest depending on your account balance or other criteria. If it’s above a certain level, a higher rate of interest will usually be applied to the whole balance.
- Banded rate: A banded rate of interest means that different rates of interest apply to different parts of your account balance. For example, the interest paid on the part of your balance between $5,000 and $10,000 may be different from the interest paid on the first $4,999 of the balance.
Interest can also be applied to bank accounts in two ways—compound or simple. Compound is calculated on the principal amount and accumulated interest, whereas simple interest is paid only on the principal, or original, funds.
Benefits of earning interest with a business bank account
Getting a bank account with interest-bearing capabilities has many advantages. Let’s go through them below.
Profits
For one, you’re making your money work for you. Growing the funds you already have is an easy way to meet your savings and spending goals, helping you get your business to where you want it to go.
Flexibility
Unlike a term deposit, an interest-bearing bank account will provide you with full access to your account – meaning you can add and take money as you please, without any restrictions. This liquidity of funds gives you greater flexibility while making sure your money isn’t losing value.
Low or no fees
Some interest-bearing bank accounts offer low to no fees, which is a win for small businesses wanting to keep overhead costs down.
Security
Most interest-bearing bank accounts are covered under the Australian Financial Claims Scheme, making it a secure way to grow your money.
Tyro Bank Account
Here at Tyro, we have our very own fee-free, interest-bearing bank account exclusive to Tyro EFTPOS and eCommerce customers to help businesses grow their money. As a business owner, you can earn more interest on your funds the longer you leave them in the account, while still having access to your funds when you need them.
The competitive variable interest rates¹ are calculated daily and paid monthly, so you can start each month with some extra cash². A welcome cashflow boost!
| Days funds in Tyro Bank Account | Base Interest Rate | Bonus Interest Rate³ | Base Interest Rate + Bonus Interest Rate |
| Up to 30 days | 0.50% p.a. | n/a | 0.50% p.a. |
| Longer than 30 days | 0.50% p.a. | 0.65% p.a. | 1.15% p.a. |
| Longer than 60 days | 0.50% p.a. | 0.80% p.a. | 1.30% p.a. |
| Longer than 90 days | 0.50% p.a. | 0.95% p.a. | 1.45% p.a. |
Ready to earn interest on your business funds? Set up a Tyro Bank Account today!
1 Interest rates are variable and subject to change. For other interest rates and interest rate tiers, refer tyro.com/rates.
2 Tyro EFTPOS and eCommerce Banking customers who don’t opt to have funds remain in the Tyro Bank Account and have their daily takings auto-swept to their nominated linked bank account, do not earn any interest.
3 Bonus interest is paid on the portion of the balance that falls within each tier.
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