Demand Deposit


DEFINITION of 'Demand Deposit'

Funds held in an account from which deposited funds can be withdrawn at any time without any advance notice to the depository institution. Demand deposits can be "demanded" by an account holder at any time. Many checking and savings accounts today are demand deposits and are accessible by the account holder through a variety of banking options, including teller, ATM and online banking. In contrast, a term deposit is a type of account which cannot be accessed for a predetermined period (typically the loan's term).


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BREAKING DOWN 'Demand Deposit'

M1 is a category of the money supply that includes demand deposits as well as physical money, such as coins and currency, and Negotiable Order of Withdrawal (NOW) accounts. According to the Federal Reserve's Consumer Compliance Handbook, demand deposit accounts have these characteristics: no maturity period (or an original maturity of fewer than seven days), payable on demand, may be interest bearing, no limit on the number of withdrawals or transfers an account holder may make, and no eligibility requirements.

  1. Term Deposit

    A deposit held at a financial institution that has a fixed term, ...
  2. Drawing Account

    An accounting record maintained to track money withdrawn from ...
  3. Money At Call

    A short-term loan that does not have a set repayment schedule, ...
  4. Nonpersonal Time Deposit

    Time deposit accounts held by corporate bank customers that pay ...
  5. Checking Account

    A transactional deposit account held at a financial institution ...
  6. Savings Account

    A deposit account held at a bank or other financial institution ...
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  1. For what types of accounts are demand deposits available?

    There are essentially three types of accounts available as demand deposits: checking accounts, savings accounts and money ... Read Full Answer >>
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    In a fractional reserve banking system, commercial banks are permitted to create money by allowing multiple claims to assets ... Read Full Answer >>
  3. Should commercial and investment banks be legally separated?

    Following the financial crisis of 2008-2009, much of the blame was directed at large financial institutions that took on ... Read Full Answer >>
  4. What is the difference between overdraft and cash credit?

    Both "overdraft" and "cash credit" can refer to a type of secured line of credit with a lender. These terms can also refer ... Read Full Answer >>
  5. What’s the difference between overdraft protection and overdraft settings?

    Overdrafting refers to the practice of granting short-term credit to an account holder when his or her balance reaches zero. ... Read Full Answer >>
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