DEFINITION of 'Transaction Deposit'

A banking deposit that has immediate and full liquidity, with no delays or waiting periods. Transaction deposits can be transferred into other cash instruments, have electronic payments authorized against them, or otherwise be transacted by the financial institution solely at the request of the account holder.

BREAKING DOWN 'Transaction Deposit'

Transaction deposits must be held in reserve by the bank at all times; they stand in contrast to time deposits and even deposits into a savings account, which may have monthly limitations on the number of transactions or transfers allowed.

Making a deposit into a conventional checking account will be considered a transaction deposit, as the account holder is allowed to withdraw the amount at any time.

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