Why are business savings accounts so rubbish?

Like most people running a business, I have a business bank account. This is fine for doing the various transactions of business life, but it is useless if you have any money squirreled away - for example, to pay that evil Corporation Tax bill lurking months in the future. The standard business bank account doesn't pay interest. But no problem - my bank offers a business savings account.

Now when it comes to personal savings, I tend to shop around and change accounts for the best interest every year, but I've been with my current business savings account for about 10 years, so I thought it was worth looking for a bit more interest. I started searching and was horrified by what I found.

If you shop around you can get maybe 2.5% on a personal instant access account for the first year (admittedly then it will typically drop to 1% or 0.5%). But if you look at the instant access business savings accounts the typical interest rate is 0.05%. No, that's not a misprint. 1/20th of a percent. That is, frankly, an insult. I asked my bank why this was the case and they muttered about money being kept longer in personal accounts, but that's really beside the point. That's a ludicrously low rate.

The good news is the account I was with was already offering 0.5% and I found one from the same provider that provides just over 1% if you are prepared to give 10 days notice, which isn't usually a problem with business savings. If you want to take advantage it's Standard Life's business savings (part of Barclays). Yet even they hide this away in a filing cabinet at the bottom of a missing staircase, with notices up saying 'Beware of the tiger.' (Thanks, Douglas Adams.) It's quite difficult to find these accounts by doing a web search or looking on a comparison site. Is this a conspiracy? Why are the rates offered so terrible? If Standard Life can offer decent rates, why can't other banks? Colour me mystified.

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