Bank of First Deposit - BOFD

AAA

DEFINITION of 'Bank of First Deposit - BOFD'

The bank where a check is initially deposited to an account. If the check is drawn on the same bank, it is an "on-us" check that can be settled in-house.

If the check is drawn on another institution, it is presented for payment and either processed through the Federal Reserve System or cleared through private arrangements between banks.

INVESTOPEDIA EXPLAINS 'Bank of First Deposit - BOFD'

The Federal Reserve System was created because, during the financial panic of 1907, many banks failed to clear checks drawn on other banks.

The industry routing numbers developed in the 1940s that appear at the bottom of checks help ensure timely payment, which is usually the same or the next business day. In the 1970s, the ACH (automatic clearinghouse) system was developed to permit the electronic conversion of checks.

RELATED TERMS
  1. Bank Draft

    A type of check where the payment is guaranteed to be available ...
  2. Automated Clearing House - ACH

    An electronic funds-transfer system run by the National Automated ...
  3. Bank

    A financial institution licensed as a receiver of deposits. There ...
  4. Federal Reserve System - FRS

    The central bank of the United States. The Fed, as it is commonly ...
  5. Automatic Bill Payment

    A money transfer scheduled on a predetermined date to pay a recurring ...
  6. Debit Card

    An electronic card issued by a bank which allows bank clients ...
Related Articles
  1. Insurance

    Bag The Best Bank Account

    Take advantage of the deals banks offer, and find the right account for your financial situation.
  2. Savings

    Are Your Bank Deposits Insured?

    Learn how the FDIC is helping to keep your money in your pockets.
  3. Home & Auto

    Are My Investments Insured Against Loss?

    Money invested in a brokerage account has some protection, but that doesn't mean you can't lose it.
  4. Options & Futures

    Who Backs Up The FDIC?

    The FDIC insures depositors against loss, but what happens if it runs out of money?
  5. Entrepreneurship

    JPMorgan vs. Goldman Sachs: A Tale of Two Stocks

    The performance of JPMorgan and Goldman has been impressive, but one has a slight edge.
  6. Savings

    2015's Top Checking Account Promotions

    Open a checking account in 2015 and the bank could give you a cash bonus. Check out these top offers.
  7. Savings

    Best Checking Accounts For Couples

    Being a couple, especially if you both have jobs, can help you qualify for benefits and fee waivers that would be tougher to get on just one salary.
  8. Entrepreneurship

    Which is The Best Bank for Your Buck, BAC or MS?

    One things stands out between these financial services giants when it comes to investing in them.
  9. Economics

    When Will The Fed Raise Interest Rates?

    We discuss how the actions of U.S. central bank leaders (i.e. “The Fed”) will affect interest rates in the near future.
  10. Savings

    Mortgage Faceoff: Bank of America Vs. Wells Fargo

    Which bank offers the better mortgage deal? Here's how they compare on two popular types of mortgage.

You May Also Like

Hot Definitions
  1. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  2. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  3. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  4. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  5. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
  6. Absorption Costing

    A managerial accounting cost method of expensing all costs associated with manufacturing a particular product. Absorption ...
Trading Center