I have been searching high and wide for a business checking account that offered both a physical presence nearby and decent interest rates. That is looking increasingly unlikely, but I did find nBank, a bank online which offers a Business Money Market account that allows limited check-writing and currently pays a healthy 4.52% APY with a $3,500 minimum. The rates also look to remain high as it is based on the 3-month T-Bill rate.
Of course, it may be too good to be true. Although nBank is FDIC insured, Bankrate.com gives it a ‘weak’ Safe & Sound rating of only 1 star (the lowest possible), and this memorandum details how it is both losing money and has “questionable asset quality”. Yeesh.
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The reason it might be difficult to find a bank that offers business interest checking accounts is because they do not exist. This stems from a depression era regulation that does not allow banks to offer business interest checking. Check out this site.
http://www.nfib.com/page/businessCheckingInterest.html
Very interesting! That is weird. No wonder they are always Money Market or Savings accounts.
Yes. The Fed has said it would like the rule changed but the Senate fails to take up the bill. The House overwhelmingly supported the bill with a 420 to 1 vote. I can only guess that large banks lobby very hard to keep the reg in place, they don’t want to pay out more in interest.
There is an exception in the law for sole proprietorships (and non-profits).
Heritage Direct (Bankrate.com 4 stars) has a Savings/Money Market account available to both individuals and businesses that is currently at 4.49% ($1000 minimum/opening). It links to an existing checking account by way of ACH transfers like other popular “personal” accounts. You could call every bank in town, find the “best” rate for a business interest checking account, then link it to the Heritage Direct account. That would be a pretty good/convenient setup.
http://www.heritagebankna.com/hdsavings.cfm
(The page is under the “personal” banking section, but if you click the apply button, it allows you to chose from a number of different applications. i.e. personal, business, trust, estate, government).
nbank, NA in Commerce, Georgia is probably going to fail- it would be the first bank failure in the USA since 2004
nBank is now First Covenant Bank AKA First Commerce Bank. They are unrated. Heritage Bank doesn’t seem like a bad option. They have 3 Stars (Not 4).
Heritage Bank is NOT a good idea for business checking. They charge $7-$10 a month, $0.50 per electronic bill pay, and up to $.017 per deposit item. They say they waive the fees at certain balance levels, but I just talked to them, and they don’t actaully waive them. They just deduct them from your interest.
Guess I will give up on finding a business interest checking account.
-Jared