With the battle for small-business deposits heating up in California, BankAmerica Corp. introduced a high-rate money market account.

The interest rate starts at 4% for the minimum balance of $10,000 and increases to 4.5% with deposits of $100,000 in the money market and Bank of America checking account.

With thrifts and nonbank financial services providers, such as Merrill Lynch, making more inroads into small-business banking, BankAmerica wants to discourage customer defections.

Bank of America requires small-business owners to have a checking account at the bank before they open the money market account.

In keeping with its policy of reducing fees and interest rates for entrepreneurs who use several bank products, Bank of America waives the monthly service charge on the business checking account.

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