Next-Day Funds

AAA

DEFINITION of 'Next-Day Funds'

In banking, money that becomes available for use on the day following the day it is deposited. In investing, next-day funds are available the business day following a trade; however, most trades have used same-day funds settlement since 1996, based on the Group of 30's recommendations for improving settlement and clearance risk, efficiency and cost. Same-day funds are available the day the trade is completed or the day the funds are deposited.

INVESTOPEDIA EXPLAINS 'Next-Day Funds'

Bank deposits must be cleared and settled before they become available. This involves transferring deposits and withdrawals between banks and ensuring that sufficient funds are available to complete the transactions.

RELATED TERMS
  1. Same-Day Funds

    Money that can be transferred or withdrawn the same day that ...
  2. Group Of 30 - G30

    A consultive group composed of academics and financiers whose ...
  3. Settlement Risk

    The risk that one party will fail to deliver the terms of a contract ...
  4. Deposit

    1. A transaction involving a transfer of funds to another party ...
  5. Clearing

    The procedure by which an organization acts as an intermediary ...
  6. Continuous Net Settlement - CNS

    An automated book-entry accounting system. CNS centralizes the ...
RELATED FAQS
  1. No results found.
Related Articles
  1. Insurance

    The Rise Of The Modern Investment Bank

    Get to know a little bit about the institutions whose actions help to guide free markets.
  2. Credit & Loans

    The Evolution Of Banking

    Banks are a part of ancient history. Find out how this system of money management developed into what we know today.
  3. Economics

    Inside National Payment Systems

    Investopedia explains: The global interconnection of U.S. payment systems makes commerical and financial transfers possible.
  4. Professionals

    Wanna Be A Bigwig? Try Investment Banking

    A career in this high-stress field can be very rewarding for the right person. Find out if you have what it takes.
  5. Personal Finance

    Overdrafting

    An overdraft occurs when money is withdrawn from a bank account in an amount that exceeds the funds available in the account. Banks often permit this as a form of short-term loan to the account ...
  6. Trading Strategies

    Eyeing a Loan? Consider Skipping the Banks

    Peer-to-peer lending platforms, such as Lending Tree, Lending Club and Prosper, offer borrowers newfound leverage. Here's a look.
  7. Personal Finance

    What's a Commercial Bank?

    A commercial bank is a type of financial institution that accepts deposits, offers checking account services, makes business, personal and mortgage loans; and offers basic financial products ...
  8. Personal Finance

    What's a Bank Rec?

    A bank reconciliation statement is a monthly statement from the bank showing all activity in an account during the previous month, along with the end-of-month balance. An individual or company ...
  9. Investing

    What's Investment Banking?

    An investment bank is a special type of bank involved in a variety of large and complex financial services for major institutions.
  10. Economics

    What's the Federal Funds Rate?

    The federal funds rate is the interest rate banks charge each other for overnight loans to meet their reserve requirements.

You May Also Like

Hot Definitions
  1. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  2. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  3. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  4. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
  5. Fringe Benefits

    A collection of various benefits provided by an employer, which are exempt from taxation as long as certain conditions are ...
  6. Irrevocable Trust

    A trust that can't be modified or terminated without the permission of the beneficiary. The grantor, having transferred assets ...
Trading Center