Term Fed Funds

DEFINITION of 'Term Fed Funds'

Funds that banks borrow from the Federal Reserve for longer than a day, but generally less than 90 days. As a general rule, banks borrow term Fed funds when they need a temporary influx of cash, but still wish to benefit from a low interest rate.

BREAKING DOWN 'Term Fed Funds'

Because they are held for longer than the customary 24 hours, term Fed funds sometimes have higher interest rates than those held for shorter periods of time, though that rate is still much lower than an individual borrower could receive.

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RELATED FAQS
  1. What are the implications of a low Federal Funds Rate?

    Find out what a low federal funds rate means for the economy. Discover the effects of monetary policy and how it can impact ... Read Answer >>
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    Learn the implications of a high federal funds rate, which include constriction of the money supply, a stronger dollar and ... Read Answer >>
  3. Why do commercial banks borrow from the Federal Reserve?

    Learn how commercial banks borrow from the Federal Reserve to meet minimum reserve requirements, and discover the pros and ... Read Answer >>
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