Commercial Account

AAA

DEFINITION of 'Commercial Account'

Any type of financial account that is owned and used by a business or corporation. Commerical account usually refers to a checking or other type of demand deposit account. Regulation Q of the Federal Reserve prohibits banks from paying interest on this type of account. They instead pay earnings credits that are based upon the average account balance.

INVESTOPEDIA EXPLAINS 'Commercial Account'

Commerical accounts usually have higher monthly service charges and other related fees than retail accounts. Many firms also hold regular interest-bearing savings accounts, which do pay regular interest. Most states also allow sole proprietors to open negotiable order of withdrawal (NOW) checking accounts that also pay regular interest.

RELATED TERMS
  1. Investment Bank - IB

    A financial intermediary that performs a variety of services. ...
  2. Adjunct Account

    An account in financial reporting that increases the book value ...
  3. Night Depository

    A bank drop box where merchants can deposit their daily cash, ...
  4. Branch Banking

    Engaging in banking activities such as accepting deposits or ...
  5. Commercial Bank

    A financial institution that provides services, such as accepting ...
  6. Bank

    A financial institution licensed as a receiver of deposits. There ...
RELATED FAQS
  1. How does online banking assist with budgeting?

    Setting up online banking can make a personal budget easier to manage through the use of multiple accounts or expense categories ... Read Full Answer >>
  2. How do I open a Swiss bank account, and what makes them so special?

    Surprisingly, opening a Swiss bank account is not that much different from opening a standard bank account because you have ... Read Full Answer >>
  3. What is the difference between a correspondent bank and intermediary bank?

    Correspondent and intermediary banks serve as third-party banks that coordinate with beneficiary banks to facilitate international ... Read Full Answer >>
  4. What are the main benchmarks that track the banking sector?

    The appropriate benchmarks for tracking banking sector performance depend on the type of banking. For instance, commercial-only ... Read Full Answer >>
  5. What are the major categories of financial institutions and what are their primary ...

    In today's financial services marketplace, a financial institution exists to provide a wide variety of deposit, lending and ... Read Full Answer >>
  6. What's the difference between investment banks and commercial banks?

    Investment banking and commercial banking are two divisions of the banking industry that provide substantially different ... Read Full Answer >>
Related Articles
  1. Credit & Loans

    The Evolution Of Banking

    Banks are a part of ancient history. Find out how this system of money management developed into what we know today.
  2. Insurance

    Your First Checking Account

    This owner's manual will show you what to expect from your bank.
  3. Investing Basics

    What Does a Financial Intermediary Do?

    A financial intermediary is an institution that acts as a go-between in a financial transaction.
  4. Credit & Loans

    What is a Financial Institution?

    A financial institution is in business to, among other things, accept deposits, make loans, exchange currencies, and broker investment securities.
  5. Economics

    What Does Principal Mean?

    For banks, principal refers to the amount due on a loan, and is used to calculate interest payments.
  6. Economics

    Explaining Prime Rate

    Prime rate is the interest rate banks charge their best (e.g. prime) customers.
  7. Economics

    What's a Correspondent Bank?

    A correspondent bank is a bank that acts on behalf of another bank, usually a foreign bank.
  8. Investing Basics

    Explaining Banker's Acceptances

    A banker’s acceptance (BA) is a way for two unfamiliar parties to transact business on credit.
  9. Economics

    Explaining Risk-Weighted Assets

    Risk-weighted assets is a banking term that refers to a method of measuring the risk inherent in a bank’s assets, which is typically its loan portfolio.
  10. Economics

    Understanding Term Loans

    A loan from a bank for a specific amount that has a specified repayment schedule and a floating interest rate.

You May Also Like

Hot Definitions
  1. Inbound Cash Flow

    Any currency that a company or individual receives through conducting a transaction with another party. Inbound cash flow ...
  2. Social Security

    A United States federal program of social insurance and benefits developed in 1935. The Social Security program's benefits ...
  3. American Dream

    The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version ...
  4. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  5. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
  6. Treasury Yield

    The return on investment, expressed as a percentage, on the debt obligations of the U.S. government. Treasuries are considered ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!