Definition of Vault Cash





What does the term "vault cash" mean? What is the definition of the term "vault cash"?

"Vault cash" is quite literally the money that a bank will keep on premises (the majority of which is usually kept in their vault) to deal with their day-to-day cash needs.

Definition of Vault Cash - IllustrationFor instance - let's say that you walk into your bank with a $700 check. You deposit the check and ask for $400 back in cash.

The bank must have a certain amount of cash on hand in order to deal with these types of every day transactions - "vault cash" is considered to be part of a bank's reserves, and banks will usually be required to have a certain amount of "vault cash" on hand.

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Let's say that you walked into your bank and asked for a significant amount of cash to be withdrawn - say, $30,000.

Well, most banks wouldn't be able to immediately accommodate this request, as they only have a certain amount of "vault cash" on hand. If you ever walk into your bank to make a request such as this, you will probably be told that the fulfillment of the request will take several business days to process. This is because the bank won't have this much physical cash on hand, and they will need to make arrangements to bring such a large amount of cash in to the bank.




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