Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Zero-Balance Account

What it is:

A zero-balance account (or "ZBA") is a business-oriented bank account that usually has a balance of $0.

How it works (Example):

Let's say restaurant company XYZ keeps its cash in Checking Account A. Every Tuesday, its accounting department writes checks to pay the bills due that week. This week, the amount of those checks is $40,150.

Company XYZ wants to keep its cash centralized in one account that pays interest. To keep as much money in the interest-bearing account, it moves only $40,150 out of the account on Tuesday so that the checks clear.

Why it Matters:

ZBAs help companies avoid having money spread out over several different bank accounts, which costs the company interest and creates more bookkeeping work.