Money Buzz 07/04
Interest-bearing checking accounts, credit card debt and more
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.
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