The amount of money kept in a bank's vault varies widely and is mostly dependent on the anticipated transaction needs of each bank, the cost of shipping currency should it run low, and the loss of potential interest on cash held in the bank rather than loaned to customers, according to the Federal Reserve Bank of St. Louis. Banks must also retain a minimum amount of cash reserves by law.
According to the Board of Governors of the Federal Reserve, small banks with transaction accounts of up to $13.3 million have no cash reserve requirement. Medium-sized banks with transaction accounts between $13.3 million and $89 million must hold cash reserves of three percent. Those banks with more than $89 million in transaction accounts must maintain cash reserves of 10 percent. The reserve cash can be held either in the bank's vault or on deposit with a Federal Reserve Bank. If the funds are held in a Federal Reserve Bank, then the bank's reserves are generally paid an interest rate, allowing the bank to make a profit on its cash. The interest rate earned from Federal Reserve deposits is typically lower than those that the bank can charge its customers.