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Premium Bank Accounts: Are They Worth the Investment for Your Finances?

By Darragh Timlin on November 30th, 2023

Premium Bank Accounts: Are They Worth the Investment for Your Finances?

 

For business owners and entrepreneurs managing company finances, selecting the right business bank account is an important decision. While basic accounts offer essential services, premium bank accounts provide luxury features and benefits not found in typical accounts, but they come with extra costs and account minimums. 

Balancing these costs with the need for comprehensive financial protection, such as money insurance, is crucial in determining if premium accounts are truly worth it for your business finances.

What are Premium Bank Accounts?

Premium or high-tier bank accounts cater to high net worth individuals and businesses with large amounts of capital. They require high opening deposits – typically  £50,000 or more. In return, premium accounts include special perks and privileges not offered to regular account holders.

Essentially, premium bank accounts open doors to services and privileges typically only accessible to high-wealth clients. The enhanced level of service can be invaluable, but it also comes at a steep price.

What are the Costs of Premium Bank Accounts?

While premium accounts offer impressive benefits, the costs can be excessive for many businesses. Cost factors include:

Account Opening Deposits 

Most premium business accounts require a minimum deposit between £50,000 and £500,000, but tiered accounts may set different deposit levels for access to certain benefits. For instance, wealth management services may require a £250,000 deposit while basic premium services need just £100,000.

Special Service Fees

While premium accounts include some free transactions like local cheque deposits, other services still incur separate fees. Expect fees for currency exchanges and other special services.

Lower Interest Rates on Low Balances

Interest rates earned on balances below the account minimum are typically very low – around 0.1-0.3% annually. This is far under regular savings account rates, but higher balances do earn elevated interest rates.

With high ongoing costs, premium accounts only make financial sense for businesses with very strong cash flow and large capital reserves. For smaller companies, the costs can quickly eat into operating budgets and profits.

Key Benefits of Premium Bank Accounts for Businesses

While not ideal for all companies, premium bank accounts can provide advantages for certain business situations:

Easy Access to Capital

For high-growth companies needing large capital loans or financing, premium account status can facilitate access to preferential interest rates and higher lending limits from the bank. This can be invaluable for funding growth goals like expanding locations, hiring talent, or developing new products.

Wealth Management

Business owners with sizable retained earnings or private wealth can benefit from the elite investment products and hands-on wealth management services offered through premium accounts. Perks like exclusive access to IPOs, tailored portfolios, and wealth advisors cater specifically to high-net-worth individuals.

Financial Guidance

Some business owners highly value having a dedicated relationship manager who understands their company inside and out. This provides personalised guidance on major financial decisions, money management strategies, and long-term fiscal planning based on intimate knowledge of their business.

Elevated Client Experiences

Client-facing businesses like financial advisors, law firms or consultants interact regularly with high net worth individuals. For them, the elite experience provided by premium bank accounts can impress clients and convey prestige. This helps attract and retain wealthy clients who appreciate luxury service.

Status Symbol

Some business owners simply feel a premium account conveys prestige, exclusivity, and financial success. The luxury perks like airport lounge access also appeal to certain tastes. While less tangible, status and perception are still business advantages.

Evaluating Costs vs Benefits for Your Company

Rather than status or perceived exclusivity, the main factors to evaluate are the actual monetary costs versus tangible monetary benefits. For most SMEs and newer companies, the high costs clearly outweigh potential advantages. However,  well-established businesses with strong revenues and consistent profitability may find the benefits justify the expenses.

You need to scrutinise your actual financial needs and determine whether premium account features directly address them. For instance, if you require significant capital financing, need wealth management services, or regularly interact with high net worth clients, the benefits may warrant the costs.

Protecting Your Finances with Brisco Business

Premium bank accounts offer impressive privileges and services for companies with substantial capital reserves, but for most SMEs, the high costs outweigh potential advantages. 

A premium account may be overkill, but every business needs protection for their finances. Brisco Business offers tailored money insurance policies to shield your cash, 

securities, and other financial assets from loss or theft on your premises or while in transit.

Having robust insurance ensures your hard-earned revenue and profits are protected from unforeseen catastrophes that could otherwise sink your company. Compare quotes with us today to learn more and get a customised quote.

Darragh Timlin

With over 25 years’ experience, Darragh is an expert in all things insurance. Starting his career in commercial property underwriting, Darragh has worked for a number of global insurers and is now Managing Director of Brisco Business, part of the wider Henry Seymour Group.

All articles by Darragh Timlin

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