Fed Plans Zero Interest on New Payment Accounts
Published Date: 5/26/2026
Proposed Rule
Summary
The Federal Reserve is proposing a change to how it treats special-purpose payment accounts, called Payment Accounts, by not paying interest on the money held in them. This update affects banks with master accounts and these new Payment Accounts but won’t change reserve requirements, which stay at zero. If you want to share your thoughts, you have until July 27, 2026, to comment!
Analyzed Economic Effects
5 provisions identified: 1 benefits, 3 costs, 1 mixed.
Fed won't pay interest on Payment Accounts
If your institution opens a Payment Account at a Federal Reserve Bank, the Reserve Banks would not pay interest on balances held in that Payment Account under the proposed revisions to Regulation D. This change is explicit in the proposal and would treat Payment Accounts differently than master accounts for interest purposes.
Payment Account holders barred from EBAs
Under the proposal, a Payment Account holder would not be allowed to participate in an excess balance account (EBA). EBAs currently pay interest on participant balances, so Payment Account holders would lose the option to hold balances in an interest-paying EBA.
Closing Balance Limit of up to $1 billion
The Board proposes that each Payment Account would be subject to a Closing Balance Limit set by the Reserve Bank based on expected payment activity, and that limit would not exceed $1,000,000,000. Reserve Banks would review an individual Payment Account's Closing Balance Limit at least annually and could allow temporary exceedances in unusual circumstances (with Board consultation if the Temporary Closing Amount exceeds $1 billion).
Reserve requirements remain at zero
The proposal would not change reserve requirement ratios; they would remain set at zero percent, consistent with prior Board actions (reserve ratios have been zero since March 2020).
Payment Accounts are optional access
Payment Accounts would be a new, optional way for institutions to request Federal Reserve accounts and services; no existing account holders would be forced to change accounts, and institutions could still request a master account or access services via a correspondent. The Board states Payment Accounts are optional and would not impose mandatory requirements on small entities.
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Key Dates
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The Federal Reserve is proposing a rule that says if you have a special-purpose payment account, you can’t borrow money from the Fed’s discount window. This change won’t affect the usual borrowing programs or interest rates. If you want to share your thoughts, you have until July 27, 2026, to speak up!
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