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Home >> Accounts >> Business Accounts
Need Interest Bearing Business Account
We are a payroll processing company and have a tax account that carries about an $500,000 average daily balance, that should increase to $750,000 shortly. Tax payments are made from this account on a weekly basis. What is the best interest bearing account to use for this money? We currently get less than 1/2%. Can we do better?
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 Rates vary based on geographic area, the institution, and the market. As a business, you are restricted on the accounts you can have and the types of transfers allowed. You can open a savings account which traditionally has a low interest rate, or a Money Market Deposit Account that pays a better rate, but is restricted as to the number of transfers you can make (for simplicity, call it six per month) and has a higher minimum balance. CDs are available, but tie up your funds and you don't seem to be looking for that.
The MMDA transfer rules are imposed by federal law. There are ways to work around them. As an example, you can visit the bank personally and move money from the MMDA to your checking account to pay your bills. That allows more transfers than the law restricts "by check." The problem is, it isn't convenient, and your bank may or may not impose a fee for excessive transfers. As to the fees, shop around if you are not satisfied where you you bank now.
Published on BankingQuestions.com 4/09/10
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