Call Money Account

A call money account is another name for a checking account. It is a descriptive name that explains that the money in the account may be called upon request by simply writing a check and giving the holder of the check the ability to call for the money by presenting the check to the bank. This type of account has also been described as a demand account because the capital held in the bank may be called at any time. This is an important feature from the perspective of the bank because it must manage its cash position o­n a daily basis. Banks are in the business of lending money – it must be aware how much money may be withdrawn at any time. Since a bank is responsible for maintaining a certain amount of cash in the bank (known as the reserve requirement), when this level is too low, the bank must take an overnight loan from another bank or from the Federal Reserve.

The term has also been used to describe revolving lines of credit offered by banks to certain customers. Under this arrangement, the bank sets a limit of the amount of credit that may be drawn by the given customer and creates an account. The customer does not have to withdraw any or all of the money o­n any set schedule, but it is there if needed. In some respects a revolving line of credit acts like a credit card, but the amount available is typically much higher, the loan is typically secured against the equity that o­ne has in o­ne’s home, and the interest rate that must be paid is typically significantly lower. The money remains o­n call for the needs of the customer, with the balance rising and falling as it is used and paid back.