
Commercial Account
A commercial account is any type of bank account that is used by corporations and businesses. Commercial or corporate banking products and services include but are not limited to the following: Loans and other credit products, such as business credit cards and working capital lines of credit that allow companies access to funds when needed Treasury and cash management services, which include overnight and short-term cash investing, wire transfers, managing working capital, and currency conversions Equipment lending and leasing services, which allows companies access to equipment for industries such as manufacturing, transportation, and information technology Commercial real estate services such as real asset analysis, portfolio evaluation, and debt and equity structuring Trade finance, including letters of credit, bill collection, and factoring Employer services such as payroll and group retirement plans Many commercial banks also have affiliate investment banking arms, which can offer commercial accounts related services, such as asset management and securities underwriters. Still, commercial banking is distinct from investment banking in that investment banking entails the creation of capital for other companies, governments, and other entities via underwriting new debt and equity securities, aiding in their sales, and helping to facilitate mergers, acquisitions, and reorganizations. Although a commercial account typically refers to the specific bank account, it can also mean a commercial account relationship, which encompasses all of the products and services that a business is involved with at that bank. A commercial account is any type of bank account that is used by corporations and businesses. A commercial account is any type of bank account that is used by corporations and businesses.

What Is a Commercial Account?
A commercial account is any type of bank account that is used by corporations and businesses. A commercial account is usually a checking or other type of demand deposit account, meaning the money can be withdrawn at any time.
Regulation Q of the U.S. Federal Reserve prohibits banks from paying interest on this type of account. Banks instead pay earnings credits, which they base upon the average account balance.



How Commercial Accounts Work
Commercial accounts typically have higher monthly service charges and other related fees than retail accounts. Retail accounts are part of consumer banking or personal banking and are serviced online or at a local branch. Companies that have commercial banking accounts usually have a business representative assigned to them. Some commercial banks have specific relationship managers that service large corporations, midsize businesses, and small businesses separately.
Commercial Account Products and Services
Commercial or corporate banking products and services include but are not limited to the following:
Many commercial banks also have affiliate investment banking arms, which can offer commercial accounts related services, such as asset management and securities underwriters.
Still, commercial banking is distinct from investment banking in that investment banking entails the creation of capital for other companies, governments, and other entities via underwriting new debt and equity securities, aiding in their sales, and helping to facilitate mergers, acquisitions, and reorganizations.
Commercial Accounts and the Earnings Credit Rate (ECR)
As noted above, most commercial accounts pay earnings credits instead of interest. However, in 2010, the Dodd-Frank Act rolled back Regulation Q and allowed for some banks to offer interest on checking accounts for its corporate customers. The goal of this change was to increase banking reserves, ideally militating against credit illiquidity, which is a lack of funds to cover losses and make loans.
The earnings credit rate (or ECR) is a daily calculation of interest, often correlated with the U.S. Treasury bill (T-bill) rate. Banks will pay ECRs on idle funds, which reduce bank service charges overall. Essentially, customers with larger deposits and balances tend to pay lower bank fees. An ECR can be viewed on the analysis and billing statement of the commercial account.
Related terms:
Accounting
Accounting is the process of recording, summarizing, analyzing, and reporting financial transactions of a business to oversight agencies, regulators, and the IRS. read more
Acquisition
An acquisition is a corporate action in which one company purchases most or all of another company's shares to gain control of that company. read more
Business Banking
Business banking is a company's financial dealings with an institution that provides business loans, credit, savings accounts, and checking accounts. read more
Checking Account
A checking account is a deposit account held at a financial institution that allows deposits and withdrawals. Checking accounts are very liquid and can be accessed using checks, automated teller machines, and electronic debits, among other methods. read more
Commercial Bank & Examples
A commercial bank is a financial institution that accepts deposits, offers checking and savings account services, and makes loans. read more
Defined-Contribution Plan
A defined-contribution plan is a retirement plan in which employees contribute part of their paychecks to an account intended to fund their retirements. read more
Demand Deposit
A DDA or demand deposit account consists of funds held in an account that can be withdrawn by the account owner at any time from the depository institution. read more
Dodd-Frank Wall Street Reform and Consumer Protection Act
Dodd-Frank Wall Street Reform and Consumer Protection Act is a series of federal regulations passed to prevent future financial crises. read more
Earnings Allowance
An earnings allowance is a calculation of the net funds available in a bank account, and the credit amount can be used to offset monthly service charges. read more
Earnings Credit Rate (ECR)
The earnings credit rate (ECR) is a daily calculation of interest that a bank pays on customer deposits. read more