Since 1933, banks have been prohibited from paying interest on business checking accounts. That provision, known as Regulation Q, was repealed with the passage of the Dodd-Frank Act last year. Effective July 21, 2011, banks can pay interest on business checking accounts.
With interest rates at historical lows, interest-bearing business checking accounts are expected to have limited appeal, especially to businesses that maintain relatively small balances in their accounts. Monthly service fees charged for many accounts far exceed interest that would be earned with the current low rates. Businesses might be more interested in reduced fees rather than earning interest on their account balances.
Nevertheless, banks such as Capital One, Citibank, TD Bank, and Wells Fargo are already marketing interest-bearing checking accounts in an effort to increase their shares of commercial business.
Community banks and credit unions, which lack the profits from a sizable credit-card portfolio that the big national banks enjoy, are expected to be slow to offer interest-bearing checking accounts to their commercial customers.