[BobbyH]

I would not mess around with CDs or Money Market Accounts to chase yield, because the returns from doing so are very low and it can be a distraction from the real business. This is particularly true now because rates are so low. For example, the average CD Rate for a 6 month CD is 0.38% (http://www.cdrate.com/?term=13).

* A CD requires you to lock your money up in the CD for a certain amount of time, e.g. 6 months

* You can get the money out early only by paying a early withdrawal penalty, which is typically 30-90 days worth of interest for a CD with a term less than a year (http://banking.about.com/od/cds/a/cdpenalty.htm)

* This is not applicable to you, but FDIC insurance typically covers up to $250k per CD, so you may need multiple CDs (http://en.wikipedia.org/wiki/Certificate_of_deposit#Deposit_...)

Money Market Account rates can be as high as 1.10% (http://www.cdrate.com/money-market/). However, they are not like checking accounts and you'll have to plan out when you withdraw what amount.

* Because of "Regulation Q", MMAs allow only 6 withdrawals a month, which sometimes includes ATM transactions, and only 3 may withdrawals may be checks (http://en.wikipedia.org/wiki/Money_market_account)

* FDIC insurance is up to $100k per account

A $200k deposit in a CD earning 3.8% would make around $7.6k over a year. The same deposit in an MMA earning 1.1% would net around $2.2k over a full year.

My personal view is that a CD or MMA requires extra effort and management time and reduces flexibility, so I don't use CDs or MMAs for my businesses unless there are very large amounts involved and a lot of stability in the business. I also don't chase rates from different banks, because of the convenience of having a single bank provide all my accounts.

[pmorici]

ingdirect.com has a checking account that gives 1.25% APY with a balance over 100k

http://home.ingdirect.com/products/products.asp?s=ElectricOr...

[rexreed]

That's a personal banking product, not a business banking product. Here are the business banking products: http://business.ingdirect.com/

Best rate is 0.95% for a business savings acct. And note that it requires linkage to a "regular" bank account.

[pmorici]

What's the difference? Besides the obvious name.

[rexreed]

As a business entity, you won't be able to get a personal account

[ryanmickle]

One is owned by the entity (associated with an EIN), while the personal account is owned by an individual (and associated with an SSN).

[bdclimber14]

The FDIC insurance limit is actually $250k. It was raise some time ago.

[dkokelley]

It was raised during the recession, possibly to boost confidence (but honestly, to maintain coverage with inflation it was overdue). There were talks for it to be a temporary raise, but I don't see anything about lowering it now. I guess it's permanent.

[kgermino]

(but honestly, to maintain coverage with inflation it was overdue) I have to disagree.

Prior to the increase there was $100,000 of coverage. In 1934 when the program was started there was $2,500 of coverage. After adjusting for inflation this $100,000 (2011) would be worth $6,055.12 (1934). [1]

[1] http://www.wolframalpha.com/input/?i=%24100%2C000+in+1934

[dkokelley]

The rate was raised to $100,000 in 1980. Adjusting for inflation from 1980 to current, the $100,000 would be worth $275,000 by today's standards. The move to $250,000 was overdue.

The prior rates are irrelevant to my point. See www.fdic.gov/bank/analytical/banking/2000dec/brv13n2_1.pdf for discussion of historical FDIC rates, and the reasoning behind them.

[bdclimber14]

It was actually because of lobbying from printing companies so they could profit by changing all FDIC insurance signs at banks. Just kidding, you are correct, inflation should have pushed this up to $250k quite some time ago.