Tangerine recently started offering a Business Savings Account. You can’t use it for writing cheques or paying bills so it seemed like a simplistic offering. About the only thing it offers you is a modest interest rate of 0.35% as of April 30 2017 1% (at the time this was written.) It left me wondering just how low the interest rate is that is offered by the Big Canadian Banks for their business savings accounts: So I checked.

A Few Words of Caution About Business Savings Accounts

The rates described here were posted online or obtained by telephone on June 26 and 27, 2014. They can and will change so please check again with a bank of interest before making any final decisions. (The idea of this article was to check whether any banks are offering particularly high or low interest.)

Most of these accounts have fees. The fee structures can be quite complex which makes it difficult to include them here. Since my primary goal is to compare the rates to that offered by Tangerine (which is not charging any fees for its Business Savings Account at the time this was written) I won’t detail any bank account fees unless that bank is offering a much better interest rate than Tangerine. Always check for details about fees before opening a new account: fees change frequently.

Which Bank Business Savings Accounts Offer the Highest Interest (on $24 000)?

I only checked into the following 6 banks. Credit unions and other banks may have better offers so you may want to shop around before opening a new account.

Many banks offer increased interest rates on higher balances which makes it more difficult to compare: You should have a good idea of your average minimum monthly bank balance to pick a bank offering the best rate for your business.

So, for a basic Business Savings Account, the banks that offered the highest interest
on an assumed monthly minimum balance of $24 000,
from best to worst were:

1. Tangerine Business Savings Account
   (around $240 a year)
   On April 30 2017, at 0.35% per year, it would only earn about $84 per year.
2. CIBC Business Investment Growth Account
   (April 30 2017 0.30% on balance of 24 000) $72
3. Scotiabank Money Master for Business Account
   (April 30 2017 0.05% on balance above 4000) $9.50
4. BMO Premium Rate Savings Account
   or TD Business Savings Account
   (April 30 2017 0.05% on balances 10 000 – 59 999.99) $7
5. RBC Essential Business Savings Account
   unknown: you have to phone in for the current rate
   (around $45 a year if I heard the correct information about the tier: Please check before opening an account and see the details below.)

Why Might Tangerine Not Be the Best Idea?

If your chequing Business account charges you for each cheque or outbound electronic transfer of funds, you need to consider the fee you will pay to move your money to/from Tangerine. Although Tangerine does not charge a fee for deposits or withdrawals, the bank managing your business chequing account may charge you for both. If the fee is too high, it will make Tangerine a less attractive option.

That said, Tangerine is currently April 30 2017 (June 2014) offering 0.35% 1% annually on the entire balance.

That’s significantly higher than what most of the Big 5 banks is offering on a small balance. However CIBC is offering a very similar rate and should be looked at closely to see what other costs or benefits it offers.

The Details of the Interest Rates Offered on Business Savings Accounts

All of these rates were posted online or obtained by telephone on June 26 and 27, 2014 and again on April 30 2017. They can and will change.

Sources for 2014 Information only:

BMO 2014
Source: http://www.bmo.com/home/personal/banking/rates/bank-accounts

BMO AgriInvest Account 2014
1.2% on the entire balance

BMO Business Premium Rate Savings Account 2014

NOTE: Interest is paid on the portion of the balance within this tier.
That means that if you have, say $65 000 in your account, they only pay the 0.55% on the $5000 not on the total $65 000.

CIBC 2014
Source: https://www.cibc.com/ca/rates/business-bank-accts-rates.html#CIBC+Business+Interest+Account

CIBC AgriInvest Account 2014
1.0% on the entire balance

CIBC Business Interest Account 2014

NOTE: Each of these rates includes an annual bonus interest rate of 0.10%.
I’m not sure exactly what that means. It sounds like 0.10% of the posted interest rate is dependent on meeting some other condition which is not clearly listed. Check before opening an account!

RBC 2014
RBC wins the prize for being the most difficult bank to get the information from. Instead of posting their rates online they make you telephone to get them. You can’t even get them from their Live Chat ops!

RBC AgriInvest Account 2014
I never did get rates from their operator for this account. Sorry. Please phone for current rates! 1-800-769-2520.
0 to 4 999.99
5 000 to 9 999.99
10 000 to 24 999.99
25 000 to 99 999.99
100 000 to 249 999.99
250 000 and over

RBC Business Essentials Savings Account 2014
I had to telephone to try to get the rates for this account. I couldn’t even use Live Chat.

The operator I spoke with wasn’t sure of the rates and had to put me on hold to check.

I think I may have mis-heard her answer: It sounded like the rate was 0 until $10 000, but then she started with the rate for balances of over $100 000. I’ll give RBC the positive benefit of the doubt for this article and assume the 0.32% rate starts at $10 000 not at $100 000. Eventually I will call again or perhaps they will wise up and start posting their rates like all the other big banks.

0 to 9 999.99: 0%
10 000 or 100 000 to 499 999.99: 0.32%
500 000 to 999 999.99: 0.37%
over a million: 0.47%

ScotiaBank 2014
Sources include: http://www.scotiabank.com/ca/common/pdf/commercial/fees_interest_schedules.pdf

ScotiaBank should win a prize for offering the largest number of types of business accounts. I’ll let you decide whether that should be a “good” prize or more of a “rotten tomato” kind of prize.

ScotiaBank Business Interest Account 2014
Source: http://www.scotiabank.com/ca/en/0,,1117,00.html

0 to 4 999:  0%
5 000 to 24 999: 0.1%
25 000 to 99 999: 0.25%
100 000 to 249 999: 0.3%
250 000 or more: 0.35%

ScotiaBank Business Investment Account 2014
Source: http://www.scotiabank.com/ca/en/0,,1117,00.html
For customers with surplus credit balances of 25 000 to 50 million.

Under 25 000: 0%
25 000 to 999 999: 0.95%
1 million to 50 million: 1.1%

Scotia Power Savings for Business 2014
Source: http://www.scotiabank.com/ca/en/0,,1071,00.html
For customers with surplus balances of 25 000 to 2 000 000.

Under 25 000: 0%
25 000 to 2 000 000: 0.95%

ScotiaBank Money Master for Business Account 2014
Source: http://www.scotiabank.com/ca/en/0,,1071,00.html

Under 5 000: 0.100%
5 000 or more 0.2000% and higher rate will be paid on the entire balance if it exceeds $5000

TD 2014
Source: http://www.tdcanadatrust.com/products-services/small-business/rates.jsp

TD AgriInvest Account 2014
1% on the total daily closing balance

TD Business Savings Account / Business Investor Account 2014
0 to 9 999.99: 0.1%
10 000 to 99 999.99: 0.25%
100 000 to 499 999.99: 0.45%
500 000 and up: 0.6%

Tangerine (formerly called ING Direct Canada) 2014
Source: http://www.tangerine.ca/en/rates/
Business Savings Account 1.0%
No minimum balance.

Should You Consider a Business Savings Account at Tangerine? 2014

That’s a really complex question. Only you know how much cash your business has to keep in short-term savings. Setting up any business bank account takes a fair amount of paperwork as well. Still, it’s worth considering if you have a high minimum monthly cash balance in your business account that is not earning any interest.

Related Reading
I’m not sure this is related to anything yet! Hopefully I’ll have some other business banking articles soon.

Join In
Do you have a Business Savings account as well as a transaction/chequing account? Has it made itself worthwhile? Please share your views with a comment.