What is the definition of "idle cash?"


Quick Answer

Business Dictionary defines "idle cash" as funds that are not invested in an income-earning vehicle. Idle cash earns no income for the owner. Money parked in a checking account that pays no interest is one example of idle cash.

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Full Answer

According to Investopedia, idle cash is often regarded as wasted funds due to the lack of appreciation. Idle cash can actually decrease in value in terms of purchasing power because it does not keep up with inflation. While it is frequently desirable to keep some funds liquid for use in paying regular bills, placing the money in a money market fund or other short-term investment vehicle can provide the desired availability to the funds while still increasing in value.

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