And three-quarters of the more than 700 finance executives surveyed said their companies realized earnings credit rates
on their bank deposits.
Gross analyzed earnings credit rates
(ECR), account balances, FDIC insurance charges, and indices
They can apply the soft earnings credit rate
(ECR) to balances until bank charges are covered and then pay hard interest on the rest.
0 percent, primarily due to higher account analysis fees resulting from a decrease in the earnings credit rate
Request rolling compensation cycles, hard charges only on pass-through services and an earnings credit rate
pegged to a standard index like the 90-day T-bill rate.
8 percent, primarily due to lower account analysis fees, stemming from an increase in the earnings credit rate
on deposit balances and lower noninterest bearing deposit balances.
The higher the earnings credit rate
, the more the compensating balances are worth.
Bank deposits are attractive because companies are uncertain about future changes in money market fund regulation, many banks allow corporate customers to defray service fees through Earnings Credits on cash holdings, and the Earnings Credit Rates
(ECR's) on those holdings are slightly higher than prevailing interest rates on similar short term investments.
Banks had been offering corporate customers attractive earnings credit rates
to encourage deposits, but those earnings credits have come down or disappeared altogether, leaving prime funds among the few remaining ways to capture additional return.