And three-quarters of the more than 700 finance executives surveyed said their companies realized earnings credit rates
on their bank deposits.
With short-term interest rates so low, the earnings credit rate
has looked attractive to companies, he said, and treasurers are comfortable with their counterparty credit risk with their banks.
Earnings allowance--the amount available to cover bank services, calculated by multiplying collected balances by the earnings credit rate
Graves also expects that many treasuries will want to continue to get the earnings credit rate
to cover their banking fees, which means they will keep funds in accounts that do not pay interest.
Lee Epstein, CEO of Decision Analytics in San Francisco, suggests keeping money in uninsured accounts when the earnings credit rate
(ECR) is worth more than the yields on most cash investments is not so risky.
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.
With earnings credit rates
so low, treasury managers work to keep balances at a minimum.
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.