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TeachMeFinance.com - explain carrying charges carrying charges -- (1) the part of the finance charge levied by most creditors to cover administrative costs of loaning money, such as billing, statement mailing costs, and bad debt losses. (2) costs incurred in order to hold title to property that is idle, non-productive, or in an interim use. (3) charges added to the price of goods or services to compensate for deferred payment. (4) fees charged by investment brokers for handling margin accounts. historic definition... Carrying charges -- A designation for the interest paid by buyers of stocks on the money represented by the difference between the margin deposited and the purchase price of the stock. Sellers of short stocks as a rule have not to pay interest charges ; only buyers have to pay such charges. Grain carrying charges consist of storage, interest and insurance. They are represented by the excess of the price for future delivery over the cash price (the price for immediate delivery). Illustration: If wheat for a future delivery is 4 cents higher than cash wheat (wheat for immediate delivery) the 4 cents represents warehousing and insurance up to the expiration of the contract. If the cash market (price) declines I cent before the termination of the contract the short seller makes 5 cents profit; if it remains stationary he makes 4 cents ; if it advances 3 cents he still profits I cent. About the author Mark McCracken Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English". Copyright © 2005 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional financial or legal advice. TeachMeFinance.com and its owner recommend consultation with a professional financial advisor prior to any investment or financial decision. Please read our disclaimer.