Fairness of Bank Rules for Compensating Balances

Insufficient balances can be traded off for higher interest rates in equivalent basis points that are easily computed. Bankers, however, are not likely to be aware of the complexity and possible quot;unfairnessquot; of these arrangements when consideration is given to the replenishment period of the customer account. For example, say a bank customer collects receivables to be deposited in its business checking account at the end of its sales credit term period, maybe 120 days. With the account replenished, the customer then draws down balances as business expenses are paid out over the next four months, whereupon receivables are then collected and the account is again replenished. The problem arises when the bank averages client balances monthly, for example, and assesses deficiency fees (especially in the third and fourth months) even though, on average, the customer might be providing the required balances. These fees can be considered unfair to the customer because the bank averaging period differs from the customer replenishment period