Loading the player...

What are 'Bank Deposits'

Bank deposits consist of money placed into banking institutions for safekeeping. These deposits are made to deposit accounts such as savings accounts, checking accounts and money market accounts. The account holder has the right to withdraw deposited funds, as set forth in the terms and conditions governing the account agreement.

BREAKING DOWN 'Bank Deposits'

The deposit itself is a liability owed by the bank to the depositor, and the word refers to this liability rather than to the actual funds that have been deposited. When someone opens a bank account and makes a cash deposit, he surrenders legal title to the cash, and it becomes an asset of the bank. In turn, the account is a liability to the bank.

There are several different types of deposit accounts including current accounts, savings accounts, call deposit accounts, money market accounts and certificates of deposit (CDs).

Current Deposit Account

A current account, also called a demand account, is a basic checking account. Consumers deposit money which they can withdraw as desired on demand. These accounts often allow the account holder to withdraw funds using bank cards, checks or over-the-counter withdrawal slips. In some cases, banks charge monthly fees for current accounts, but they may waive the fee if the account holder meets other requirements such as setting up direct deposit or making a certain number of monthly transfers to a savings account.

Savings Accounts

Savings accounts offer the account holder interest on his deposits. However, in some cases, account holders may incur a monthly fee if they do not maintain a set balance or a certain number of deposits. Although savings accounts are not linked to paper checks or cards like current accounts, their funds are relatively easy for account holders to access. In contrast, money market accounts offer slightly higher interest rates than savings accounts, but account holders face limitations on the number of checks or transfers they can make from these accounts.

Time Deposit Accounts

Like a savings account, a time deposit account is an investment vehicle for consumers. Also known as certificates of deposit (CD), time deposit accounts tend to offer a higher rate of return than traditional savings accounts, but the money must stay in the account for a set period of time. In other countries, time deposit accounts feature alternative names such as term deposits, fixed-term accounts and savings bonds.

Call Deposit Accounts

Financial institutions refer to these accounts as interest-bearing checking accounts, Checking Plus or Advantage Accounts. These accounts combine the features of checking and savings accounts, allowing consumers to easily access their money but also earn interest on their deposits.

Federal Deposit Insurance Corporation

The Federal Deposit Insurance Corporation (FDIC) provides deposit insurance that guarantees the deposits of member banks up to $250,000 per depositor, per bank. Member banks are required to place signs visible to the public stating that "deposits are backed by the full faith and credit of the United States Government."

RELATED TERMS
  1. Call Deposit Account

    A bank account for investment funds that offers the advantages ...
  2. Deposit Interest Rate

    The interest rate paid by financial institutions to deposit account ...
  3. Time Deposit

    A savings account or certificate of deposit (CD) held for a fixed-term, ...
  4. Brokered Deposit

    A large-denomination bank deposit that is sold by a bank to a ...
  5. Deposit In Transit

    A deposit in transit is money that has been received by a company ...
  6. Deposit Slip

    A small written form that is sometimes used to deposit funds ...
Related Articles
  1. Investing

    What is a Demand Deposit?

    A demand deposit is any type of account where the money in the account may be withdrawn at any time without prior notice to the financial institution.
  2. Personal Finance

    Find the Best Savings Account Rates

    You know how to spot the highest interest rate, but how do you really get the best deal on savings accounts?
  3. Personal Finance

    Handling High-Yield Savings Accounts

    Is this the savings route for you? Read on to find out what these accounts have to offer.
  4. Investing

    How Time Deposits Work

    A time deposit is an interest-bearing bank deposit that has a specific maturity date.
  5. Personal Finance

    Explaining Checking Accounts

    A checking account is an account at a financial institution, usually a bank, that allows for deposits and withdrawals.
  6. Personal Finance

    Get the Best Savings Interest Rates For You

    How do you choose between market deposit accounts, CDs and traditional savings accounts?
  7. Investing

    What is a Bank?

    A bank is a financial institution licensed to receive deposits or issue new securities to the public.
  8. Personal Finance

    The 7 Best Places To Put Your Savings

    You work hard to put your money away for the future, but where you should you keep it?
RELATED FAQS
  1. For what types of accounts are demand deposits available?

    Learn about the different types of accounts designated as demand deposit accounts, such as savings accounts and money market ... Read Answer >>
  2. How liquid are money market accounts?

    Understand the characteristics that distinguish money market accounts from checking, savings account and money market funds ... Read Answer >>
  3. What determines the interest rate in my money market account?

    Placing funds in a money market account may provide a higher interest rate than a savings account due to the underlying securities ... Read Answer >>
  4. How do you calculate payback period using Excel?

    Understand the various fees that can be assessed on a personal or business checking account, and learn methods to avoid being ... Read Answer >>
Trading Center