Zero Balance Account (ZBA)

A zero balance account (ZBA) is a type of bank account that requires a minimum balance to be maintained. If the balance falls below the minimum, the account may be subject to fees or penalties. ZBAs are often used by businesses to manage cash flow and avoid overdraft fees.

There are two main types of ZBAs:

• Sweep accounts automatically transfer funds from a linked checking account to cover any negative balances in the ZBA. This can help businesses avoid overdraft fees, but it can also lead to overdraft fees on the linked checking account if the balance falls too low.
• Deposit accounts allow businesses to deposit funds into the account and then withdraw them as needed. This can be a convenient way to manage cash flow, but it is important to keep track of the minimum balance requirement so that the account does not become overdrawn.

ZBAs can be a useful tool for businesses, but it is important to understand the risks and fees associated with these accounts before opening one.