With business cash on deposit up by 6%, many businesses are missing out on potential interest with 31% of business deposit accounts paying just 0.1% or less on balances of £10,000.
These are findings of new research from Cambridge & Counties Bank. It means businesses are potentially missing out on “millions of pounds” according to the bank.
Those firms with a bigger cash deposit are also affected, with 23% of business deposit accounts paying the same low rate on balances of £1 million.
Mike Kirsopp, chief executive at Cambridge & Counties Bank, said: “Many of the UK’s 5.2 million SMEs are not only finding it difficult to secure credit from some banks, they are also being offered very poor rates of interest on their deposits.
“SMEs have around £65 billion in deposit accounts and if much of this is in low paying accounts they are literally losing hundreds of millions of pounds a year in interest. This problem is getting worse too, as the latest figures show business deposits were up 6% in the 12 months to the end of 2014.”
According to the research, 10% of accounts offer businesses an interest rate of more than 1% Gross/AER or more on balances of £10,000 and just 1% offer over 1.5% Gross/AER.
Kirsopp added: “The good news is that there are well over 200 business deposit accounts to choose from, so it really pays to shop around to ensure you are receiving a competitive return on your cash.”
Cambridge & Counties Bank, which is jointly owned by Cambridgeshire Local Government Pension Fund and the University of Cambridge’s Trinity Hall, has launched a 95-day notice business deposit account paying 1.75% Gross/AER on balances of between £10,000 and £3 million.