APY on checking, explained
Most traditional business checking accounts pay 0% — your operating cash just sits there. A high-yield (or interest-bearing) checking account pays an APY, the annual percentage yield, on your balance. At 1.75% APY, $50,000 of idle operating cash earns roughly $875 over a year without you moving it into a separate savings or sweep account.
The point is that the money you need liquid for payroll, vendors, and taxes doesn't have to choose between 'accessible' and 'earning.' It can be both.
What to look for
Three things separate a genuinely good high-yield account from a marketing number:
- The fees behind the rate. A nice APY means little if it's eaten by monthly maintenance fees, minimums, or transaction charges. Look for $0 monthly fees.
- How much is insured. Standard FDIC coverage is $250,000 per bank; some accounts extend it through partner-bank networks.
- Whether you have to jump through hoops. Tiered rates that require huge balances or a set number of debit swipes are common. A flat, straightforward APY is friendlier.
Where Holdings fits
Holdings is a business account that pays 1.75% APY on checking with $0 monthly fees and FDIC coverage up to $3M (via i3 Bank, Member FDIC, through a program-bank network). Banking, invoicing, and payment links are free.
The difference from a plain high-yield account is that the accounting is native to it: a paid invoice is already in your books, so the account earns interest *and* keeps your records, with no second tool and no month-end reconciliation.
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Frequently asked questions
How is APY different from an interest rate?
APY (annual percentage yield) reflects the interest rate plus the effect of compounding over a year, so it's the truer measure of what you'll actually earn. Holdings advertises 1.75% APY on business checking.
Is the APY on a high-yield checking account guaranteed?
No — APY on checking is variable and can change with market rates, like any deposit account. It's not a fixed-term guarantee. What you should pin down is whether fees or balance requirements quietly offset it.
Does Holdings charge fees that cancel out the interest?
No. Holdings business checking has $0 monthly fees, so the 1.75% APY isn't clawed back by maintenance charges. Full accounting is a separate $25/mo plan if you want it; the banking and invoicing are free.