How to Compare APYs on High-Yield Business Accounts

Choosing where your company parks its cash isn’t just a back-office detail—it’s a lever for growth. The Annual Percentage Yield (APY) you earn on deposits can subsidize operating costs, extend runway, and strengthen resilience in slow seasons. Whether you keep liquidity in a high-yield savings, a money market deposit account, or a business checking account that earns interest, comparing APYs correctly helps you capture more yield without sacrificing safety or access.

APY 101: What It Measures and Why It Beats “Rate”

APY expresses the real, one-year return on a deposit after compounding. It’s not the same as the nominal interest rate you see in headlines. APY bakes in how often interest is credited—daily, monthly, or quarterly—so it’s the apples-to-apples number for comparison across providers.

APY vs. Interest Rate—The Practical Difference

An account quoting 3.00% interest with daily compounding will deliver a slightly higher APY than one compounding monthly at the same 3.00%. Over large balances and long horizons, that compounding gap turns into meaningful dollars, especially for businesses holding six or seven figures in operating reserves.

The Levers That Drive Your Real APY

APY is a starting point; the structure behind it determines your take-home yield. Understanding these levers prevents unpleasant surprises after you’ve moved funds.

Compounding Frequency

Daily compounding credits interest on interest more often, boosting effective earnings. When two accounts show similar APYs, the one with more frequent compounding may still edge ahead over time, especially if you top up balances frequently.

Balance Tiers

Many business products pay “up to” a headline APY that only applies within a tier (e.g., 0–$100K, $100K–$1M, $1M+). If your balance sits above a tier, the marginal dollars may earn a lower APY. Map your expected average balance to the provider’s schedule—not just to the teaser rate.

Introductory vs. Ongoing APY

Promotional yields often expire after 3–6 months. Ask for the post-promo APY in writing and model your annual earnings based on the blended rate you’ll actually see across the full year.

Fee Drag

Monthly maintenance fees, transaction charges, and excess withdrawal fees reduce net yield. A 3.00% APY can look more like 2.65% after $40/month in fees on a $150,000 balance. Always compute “APY minus fees” to get your true, net return.

Transaction and Access Limits

Some savings and money market deposit accounts limit certain transaction types. If your operating rhythm requires frequent outbound transfers, choose an account with generous limits so you don’t pay penalties that erode earnings.

Safety First: Insurance and Counterparty Risk

Yield only matters if principal is protected. Confirm the institution is FDIC- or NCUA-insured and that your deposits are in true deposit accounts (savings, checking, MMDA, CDs)—not mutual funds or brokered investments. If balances routinely exceed $250,000 per legal entity at one institution, ask about reciprocal deposit networks or sweep programs that spread funds across multiple insured banks while keeping a single dashboard.

Verifying Coverage

Check the insurer’s database (FDIC BankFind or NCUA’s locator), request written disclosures on where funds reside (especially with fintech partners), and keep titles/EINs consistent so ownership categories are clear if coverage is ever needed.

How to Compare APYs Step by Step

A structured review prevents you from being seduced by a teaser rate that doesn’t fit your operations.

Step 1: Define the Balance Profile

Forecast your minimum, average, and peak balances for the next 6–12 months. Apply those numbers to each provider’s tier table to estimate a realistic, weighted APY—not just the top band.

Step 2: Map Cash Use and Access Needs

If you’ll touch funds daily for payroll and vendor runs, a liquid account (including a business checking account that earns interest) may be superior to a slightly higher-yielding product with tight limits. If reserves are truly idle for 90+ days, CDs or tier-based savings could make sense.

Step 3: Collect the Fine Print

For each option, capture compounding frequency, ongoing APY, promos and their durations, fee schedules, minimums to earn the stated APY, and any activity requirements (like a set number of card transactions).

Step 4: Compute Net Yield

Translate APY to dollars: Net Earnings = (Average Balance × APY) − Annualized Fees. Run a conservative case (lower balance, lower APY) and a base case so your decision isn’t fragile to small changes.

Step 5: Stress-Test with Rate Changes

Business APYs are often variable. Ask how quickly the institution reprices after market moves and whether your APY is pegged to an index or is discretionary. A provider with fast upward adjustments during rising-rate cycles (and reasonable lag in downturns) can add real value over time.

Worked Example: Choosing Between Three Offers

Imagine a $400,000 average balance.
Offer A: 3.40% APY, daily compounding, $0 fees, APY applies to full balance. Annual earnings ≈ $13,600. Offer B: 3.60% APY, monthly compounding, $35/month fee, top tier only to $250,000; amounts above earn 2.80%. Earnings ≈ (250,000×3.60%) + (150,000×2.80%) − $420 fees = $9,000 + $4,200 − $420 = $12,780. Offer C: 3.25% APY promo for 4 months, then 2.90% ongoing, daily compounding, no fees. Blended APY ≈ [(4/12)×3.25% + (8/12)×2.90%] = ~3.01%. Earnings ≈ $12,040. On these inputs, Offer A wins despite not having the highest headline rate; its no-fee structure and lack of tiers deliver the best net yield.

Matching Account Types to Use Cases

Different buckets of business cash deserve different homes.

Operating Cash (0–30 Days)

Keep immediate-use funds in an account with high liquidity and robust payment tools. If available, a business checking account that earns interest lets operating dollars accrue yield without extra sweeps.

Short-Term Reserves (30–180 Days)

High-yield savings or money market deposit accounts strike a solid balance between access and return. Look for daily compounding, minimal fees, and straightforward tiering.

Longer-Horizon Reserves (6–18 Months)

CD ladders can outperform variable accounts if you don’t need access. Stagger maturities so a slice comes due each quarter, preserving flexibility.

Red Flags That Can Shrink Your Earnings

Promos that require hard-to-meet activity hurdles; teaser APYs that drop sharply after a short window; complex tier structures where most of your balance lands in a lower bracket; relationship requirements that force you into fee-bearing add-ons; and accounts marketed as “money market” that are actually investment funds, not insured deposits. When in doubt, ask for a one-page, plain-English summary of how, when, and on what balances the APY applies.

Questions to Ask Every Provider

What is the ongoing (non-promo) APY at my expected balance? How often is interest compounded and credited? What minimums must I maintain to earn the quoted APY? Which fees apply and how can I waive them? Are there limits on outbound transfers or transactions? Is the account insured and under which ownership category will my business be covered? How quickly do rates reprice when market rates change? Can you provide historical APY ranges over the last 12–24 months?

Building a Comparison Checklist

Create a simple table with columns for APY (promo/ongoing), compounding frequency, tiers and thresholds, monthly/annual fees, access limits, insurance details, and integration (ACH/wires, user roles, accounting sync). Score each criterion 1–5 by importance to your workflow. The highest total often reveals the best “all-in” value—not just the shiniest rate.

Optimize Over Time, Not Just at Account Opening

Rates move. Set a quarterly calendar reminder to review APYs and balances. If your average balance has grown into a new tier—or your rate has drifted below market—renegotiate, reallocate to a better account, or deploy idle excess into planned initiatives. Small basis-point improvements compound across quarters into meaningful savings.

Final Thoughts: Put Idle Dollars to Work, Safely

Comparing APYs isn’t about chasing the highest number—it’s about maximizing net, insured, low-friction earnings that align with how your business actually uses cash. By standardizing the way you evaluate compounding, tiers, fees, liquidity, insurance, and rate behavior, you’ll choose accounts that deliver durable value through rate cycles and growth phases. Whether your priority is frictionless payments or squeezing more from reserves, pairing the right savings vehicle with a business checking account that earns interest ensures every dollar contributes to stability and momentum.