What is 'Money At Call'

Money at call, or "at call money," is any financial loan that is payable immediately and in full upon demand. Typically, it is a short-term, interest-paying loan from one to 14 days made by a bank (or financial institution) to another bank.

BREAKING DOWN 'Money At Call'

Typical money at call loans do not have set repayment schedules but are payable immediately and in full upon demand. They give banks a way to earn interest while retaining liquidity. Investors might use money at call to cover a margin account. The interest rate on such loans is called the call-loan rate.

This is different from short notice money, which is similar but implies a notice of call of up to 14 days. After cash, both money at call and short notice are a bank's most liquid assets. While they are usually interest-earning secured loans, their true value is in providing the banks an opportunity to profit from surplus funds and maintain proper liquidity levels.

Money at call is an important component of the money markets. It has several special features, including use as a extremely short period funds management, as an easily reversible transaction, and as balance sheet management. It is low cost in that it is done bank to bank without the use of a broker. It helps to smooth the fluctuations and contributes to the maintenance of proper liquidity and reserves, as required by regulations. It also allows the bank to hold a higher reserve to deposit ratio than would otherwise be possible, allowing for greater efficiency and profitability.

Other Types of Money at Call

Many different types of financial instruments can be "called," or declared payable immediately. Short-term lending by banks is callable by the lender. However, many money at call instruments are callable by the borrower. the most notable is a callable bond.

Many types of bonds can be called, or mandatorily redeemed before maturity, and this provision is written in the bond's indenture and prospectus. These bonds usually have a period of time when they are not callable but then switch to callable for the rest of the life of the bond. For example, a 30-year bond may have a 10-year call feature, meaning the bond becomes callable after 10 years. Typically, the bondholder receives a premium above the par value, or face value, of the bond.

Other fixed-income securities, such as certificates of deposit, may also have call features. Even common and preferred stock may have call features if a company wants the option to buy back its shares at a certain price.

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