Non-Interest Bearing? Then Make Sure That You Say So

Written By: Jay L. Hack


If your bank is holding money in an account and you do not want to pay interest, make sure that your agreement to hold the funds says so IN WRITING! In December 2018, a New York appellate court decided that loan documents for a revolving line of credit were ambiguous when the documents only stated that cash collateral would be held in a "Business Money Market Account." The bank apparently argued that it was free to pay 0.01% interest on such an account. The borrower claimed that he had an oral promise to get 0.76% interest. Result? A trial on the issue of interest. Adding insult to injury, the amount in dispute was only $7,813. The weak drafting of the loan documents had already forced the bank to pay legal fees at the trial court level for a motion and to brief and argue an appeal, with the case being sent back for a trial to resolve the ambiguity.

Today’s Takeaway? If you are holding money for ANY reason and you do not want to pay interest on it, make sure that the documents by which you are holding the deposit explicitly say the deposit will be non-interest bearing. Do not rely on the fact that the type of account you reference gives you the option not to pay interest.

Jay L. Hack is available at

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