Why don’t banks pay the highest rates?

Here’s a fact that hits most businesses hard: Your bank of choice, the one you’ve built a solid relationship with, probably isn’t going to pay you the highest interest rates on your business deposits.

For many, that realization sparks an instinctual reaction to jump ship and switch to a bank promising a higher rate. There are a variety of reasons why we don’t advocate for that (which you can read more about here), but one of the key factors at play is this: Even switching to a different bank may not yield the highest possible rates.

It’s better to understand why your bank doesn’t charge the highest rate — and to understand that there is a way to keep your bank and earn nationally competitive interest rates.  

The backstory on bank rates

In general, banks have significant leeway in how they determine the interest rates they pay on business deposits, but there are other factors at play.

Federal Reserve policies and other economic factors play a big role. But competition is also key. Banks look to other financial institutions to set a rate that makes them an attractive option for new business, without becoming overly generous. In practice, that means smaller markets with less competition may have higher rates than larger markets with more.

Overall, though, the major incentive for most financial institutions is to maximize profits for their shareholders. That doesn’t always equate to the best rates for you and your deposits.

Deposit management + fintech = competitive rates

At ADM, we knew there was a better way — one that would allow businesses to earn almost seven times the national average money market fund with less risk and overnight liquidity. And it involves, first and foremost, a network of banks and credit unions we’ve cultivated strong relationships with.

Those financial institutions often need deposits to fund their businesses. As a result, they’re willing to pay ADM competitive rates for access to large amounts of funds. We then pass those higher rates on to our cash clients, through our proprietary deposit management technology.

Fintech is core to this process because it allows our customers to travel beyond their city, state or even region to tap into competitive rates across the country. We live in a global, interconnected world; it’s time our customers started reaping the benefits.

There’s one more key element to all of this: the safety of your hard-earned cash. The FDIC – or NCUA for credit unions – will only insure any one account for up to $250,000. That means anything you deposit above and beyond that will be vulnerable, should the worst-case scenario transpire. (And it wasn’t that long ago that worst-case scenarios were a reality in the financial world.)

So while our technology is searching out the most competitive rates for your business deposits, we are also spreading it around to different institutions, to ensure every last dollar is protected by the full force of the FDIC or NCUA.

So when you think about it, the solution to the interest rate predicament should read: government insurance + network + deposit = best-case scenario for our corporate clients.

How can you start earning nationally competitive rates?

We know businesses need access to cash to keep their operations running. We also know those businesses want to earn as much as they can on that cash while it’s lying in wait. That’s why we created a solution with safety, liquidity and profitability foremost in mind. Want to explore how ADM can help you find a nationally competitive rate (while allowing you to keep your bank)? Contact one of our friendly associates today, or click here to explore how our deposit management services work.


*American Deposit Management Co. is not an FDIC/NCUA-insured institution. FDIC/NCUA deposit coverage only protects against the failure of an FDIC/NCUA-insured depository institution.

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