Bank Deposits
What Are Bank Deposits?
Bank deposits comprise of money placed into banking institutions for safekeeping. These deposits are put aside to installment accounts, for example, savings accounts, checking accounts, and money market accounts. The account holder has the privilege to pull out deposited funds, as set forward in the terms and conditions governing the account agreement.
How Bank Deposits Work
The deposit itself is a liability owed by the bank to the depositor. Bank deposits allude to this liability rather than to the genuine funds that have been deposited. At the point when somebody opens a bank account and puts aside a cash installment, he gives the legal title over to the cash, and it turns into an asset of the bank. Thusly, the account is a liability to the bank.
Types of Bank Deposits
Current (Demand Deposit) Account
A current account, likewise called a demand deposit account, is a fundamental checking account. Consumers deposit money and the deposited money can be removed as the account holder wants on demand. These accounts frequently permit the account holder to pull out funds utilizing bank cards, checks, or over-the-counter withdrawal slips. At times, banks charge month to month fees for current accounts, however they might defer the fee in the event that the account holder meets other requirements, for example, setting up direct deposit or making a certain number of month to month transfers to a savings account.
There are several distinct types of deposit accounts including current accounts, savings accounts, call deposit accounts, money market accounts, and certificates of deposit (CDs).
Savings Accounts
Savings accounts offer account holders interest on their deposits. Nonetheless, at times, account holders might cause a month to month fee on the off chance that they don't keep a set balance or a certain number of deposits. In spite of the fact that savings accounts are not linked to paper checks or cards like current accounts, their funds are somewhat simple for account holders to access.
Conversely, a money market account offers marginally higher interest rates than a savings account, however account holders face more limitations on the number of checks or transfers they can make from money market accounts.
Call Deposit Accounts
Monetary institutions allude to these accounts as interest-bearing checking accounts, Checking Plus, or Advantage Accounts. These accounts join the features of checking and savings accounts, permitting consumers to handily access their money yet in addition earn interest on their deposits.
Certificates of Deposit/Time Deposit Accounts
Like a savings account, a time deposit account is an investment vehicle for consumers. Otherwise called certificates of deposit (CD), time deposit accounts will generally offer a higher rate of return than traditional savings accounts, however the money must remain in the account for a set period of time. In other countries, time deposit accounts feature alternative names, for example, term deposits, fixed-term accounts, and savings bonds.
Special Considerations
The Federal Deposit Insurance Corporation (FDIC) gives deposit insurance that guarantees the deposits of member banks for no less than $250,000 per depositor, per bank. Member banks are required to place signs apparent to the public expressing that "deposits are backed by the full faith and credit of the United States Government."
Features
- Saving and checking accounts acknowledge bank deposits.
- Bank deposits are considered either demand (the bank is required to return your funds on demand) or time deposits (banks ask for a predetermined time frame outline for accessing your funds).
- Most bank deposits are insured up to $250,000 by the FDIC.
