Good Faith Money

DEFINITION of 'Good Faith Money'

The deposit of money into an account by a buyer to show that he or she has the intention of completing the deal. In most cases, the deposit amount will be a percent of the amount owed.

The money in an account can also be known as "margin" or a "performance bond", depending on the type of transaction.

BREAKING DOWN 'Good Faith Money'

An example would be a homebuyer depositing money into an escrow account. When this is done, the seller of the home knows that the buyer will fulfill the terms of the contract and make the purchase.

RELATED TERMS
  1. Deposit

    1. A transaction involving a transfer of funds to another party ...
  2. Bank Deposits

    Money placed into a banking institution for safekeeping. Bank ...
  3. Call Deposit Account

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

    The interest rate paid by financial institutions to deposit account ...
  5. Transaction Deposit

    A banking deposit that has immediate and full liquidity, with ...
  6. Future Dating

    Crediting a bank account to which the funds will be made available ...
Related Articles
  1. Savings

    Where To Put Your Cash: Call Deposit Vs Time Deposit Accounts

    Time deposit accounts and call deposit accounts allow customers to earn higher interest in exchange for less access to their cash.
  2. Savings

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    A demand deposit is any type of account where the money in the account may be withdrawn at any time without prior notice to the financial institution.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

    Explaining Term Deposits

    A term deposit (more often called a certificate of deposit or CD) is a deposit account that is made for a specific period of time.
  4. Term

    How Time Deposits Work

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

    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?
  6. Home & Auto

    What does "In Escrow" Mean?

    Escrow is a financial agreement involving two parties, usually a buyer and a seller. The buyer deposits money, securities or other funds into the escrow account, where they are held until both ...
  7. Mutual Funds & ETFs

    Debt Mutual Funds Vs. Fixed Deposits

    Learn about the advantages and disadvantages of debt-oriented mutual funds and fixed deposit accounts, including how each investment generates income.
  8. Savings

    4 Savings Accounts for Investors

    Curious about the best saving accounts and which ones suit investors?
  9. Personal Wealth & Private Banking

    Money Market Rates: Finding the Best Accounts in 2016

    This helpful rate calculator quickly shows you where to find the highest interest rate on a money market account.
  10. Personal Wealth & Private Banking

    Money Market Rates: Finding the Best Accounts in 2016

    This helpful rate calculator quickly shows you where to find the highest interest rate on a money market account.
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. What is the difference between a demand deposit and a term deposit?

    Understand the meaning of demand deposits and term deposits, and learn about the major differences between these two types ... 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. What are the Federal Reserve's guidelines on demand deposit accounts?

    Read about some of the Federal Reserve's requirements and guidelines regarding the treatment, safeguarding and processing ... Read Answer >>
  5. What proportion of my income should I put into my demand deposit account?

    Find out how much money to keep in your liquid demand deposit accounts, such as checking or savings accounts, and discover ... Read Answer >>
  6. Why would you keep funds in a money market account and not a savings account?

    Read about the differences between money market accounts and savings accounts, and see why a depositor would elect a money ... Read Answer >>
Hot Definitions
  1. Reverse Mortgage

    A type of mortgage in which a homeowner can borrow money against the value of his or her home. No repayment of the mortgage ...
  2. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  3. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  4. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  5. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  6. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
Trading Center