Money Buzz 07/04
Your Best Interest
Thanks to a federal law dating back to the Great Depression, small businesses have long suffered an interest inequity-one that the Business Checking Freedom Act, recently passed by the House, may soon change.
A 70-year-old law currently bans banks from paying interest on business checking accounts and forces business owners to choose between non-interest-bearing accounts and more costly "sweep" accounts that move checking account funds into an interest-bearing money market account at the end of each business day. "Most small businesses do not have the resources necessary to maintain sweep accounts," asserts U.S. Rep. Sue Kelly (R-NY). She explains that sweep accounts typically require a minimum balance and generate time-consuming paperwork.
Repealing the law will create a free market incentive for banks to bring interest-bearing business checking accounts to market, says Kelly, who authored the bill and hopes to see it passed into law this year. "Our small businesses should not be denied the opportunity to earn interest on their money as large businesses can with sweep accounts," she says. "This legislation repeals an outdated law, creating a new and broader market option, and leveling the playing field for small businesses."
For every $1,000 in revenue, U.S. businesses pay
in workers' compensation costs.
SOURCE: Marsh Inc.
The average U.S. consumer carries
in credit card debt.
SOURCE: The Gallup Organization
is a freelance writer in New York City specializing in business and finance.
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