Credit will be determined by using the previous month’s average 91-day Treasury bill rate and applying the rate to the monthly average collected balance, less Federal Reserve requirements. The following illustration assumes there is $40.00 of activity fees on your account, with an earnings credit of 6% and a Federal Reserve requirement of 10%.
| Average Collected Balance |
$6,000.00
|
| Less Reserve Requirement (10%) |
$600.00
|
| Equals Average Investible Balance |
$5,400.00
|
| Net Earnings Credit (6%) |
$26.63
|
| Activity Fee |
$40.00
|
| Less Earnings Credit |
$26.63
|
| Equals Monthly Activity Fee charged to account |
$13.37
|
Definitions Used in Calculating Earnings Credit:
Average Collected Balance: The total collected daily balances divided by the number of days in a statement cycle.
Federal Reserve Requirement: Federal regulations require banks to hold a percentage of funds on deposit deducted from the average collected balance.
Average Investable Balance: The balance remaining after the reserve requirement is subtracted from the average collected balance. The earnings credit rate is applied to this amount.
Earnings Credit: A non-cash credit applied to your business checking account that may only offset service charges.
