Let's talk about something most people completely overlook... where your cash is actually sitting.
Here's the hard truth!! If your money is just hanging out in a checking account earning 0% interest, inflation is quietly eating it. Every single month.
Here's a real example. Say you've got $50,000 sitting in a business checking account earning nothing. If inflation is running around 3% a year, by the end of year one you've got the purchasing power of roughly $48,500... year two, closer to $47,000... by year five? You're down to about $42,000 in real value. You never touched it. Nothing was stolen. But $8,000 just... disappeared.
So let's break down the terms!!
Purchasing power is just what your money can actually buy. $100 today doesn't stretch as far as it did five years ago. When your cash earns nothing and inflation keeps climbing, your balance looks the same on paper... but it buys less and less over time.
Inflation is the rise in prices over time. A dollar today buys less than a dollar did a year ago. If you're parked in a 0% checking account, you're losing ground every month without doing anything wrong.
Interest is money the bank pays YOU just for keeping your funds with them. Think of it like rent... you're letting the bank use your money to fund their loans and investments, and they pay you a percentage back. That percentage is usually shown as an APY (Annual Percentage Yield) — basically your total return over a year, compounding included.
So what do you do about it? Two options worth knowing!!
Interest-bearing checking accounts. Some banks will actually pay you interest on the balance in your everyday business checking. Even a modest APY on your operating cash adds up over time. Not all banks offer this, so you have to ask.
Business high-yield savings accounts. A high-yield savings account (HYSA) offers a significantly higher APY than a traditional savings account — often 10x or more. The trade-off is liquidity... you can't swipe a debit card from it. But it's a great home for your cash reserves, your tax set-aside, or anything you're not touching for the next 30-90 days.
Here's how I chose our banking partner for ForestTrack...
I had three non-negotiables going in.
National credibility. I needed to know my deposits were safe. That means FDIC-insured — the Federal Deposit Insurance Corporation insures deposits up to $250,000 per account, per bank. Your safety net if a bank fails.
Real customer service. Small businesses get ignored at big banks. I wanted to actually reach a human being.
Earned interest. I refused to let idle cash sit there doing nothing for us.
The bottom line!! Banks work for themselves by default. A little research puts them to work for you instead. Compare APYs, ask about interest-bearing checking, and move your reserves somewhere they're actually growing.
My go-to resource to determine which bank account is best is NerdWallet - https://www.nerdwallet.com/business/banking/best/types
Your future self will thank you!! 💚
