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View Full Version : Except opportunity cost what is the normal cost of cash holdings?


deadline_101
Dec 3, 2010, 11:15 AM

Just Looking
Dec 3, 2010, 12:13 PM
Depending on where you have your cash, there can be fees involved. If you have liabilities, there could be interest involved. In times of inflation, holding cash can cost in terms of higher prices in the future. Holding cash can mean not even earning interest on the balance, so something as simple as a zero balance account can make a big difference.

With most banks, having a minimum cash balance saves you fees as the bank uses the average balance to cover the cost of fees that would have otherwise been charged. Of course, there is even a fee for providing this service, so the amount of fees involved have to be high enough to make the service charge worthwhile.

You question could have a few meanings. I hope I answered it. Otherwise, you can post again with a more specific question. Thanks.