Bank Deposits

What is Bank Deposits?

Definition

Bank deposit refers to the money an account holder keeps (deposits) in the bank for safekeeping to be accessed at a later date. The account holder has full rights to access the money at any time as provided by the terms and conditions assigned to the account. Deposit accounts such as savings accounts, current accounts, call deposit accounts, certificates of deposit (CDs), and money market accounts are accounts that have been set apart for bank deposits.

Understanding Bank Deposits

Bank accounts are liabilities to banks as the cash deposited into a deposit account automatically becomes an asset to the bank, that is, once an account holder deposits cash into an account the legal title to the cash is transferred from the account holder to the bank, hence, the account becomes a liability to the bank. It is then safe to say that a bank deposit is a liability owed by a bank to an account holder/depositor.

There are majorly two types of Bank Deposits; the demand deposits and time deposits. The demand deposit refers to the payment of cash into an account that makes provision for the depositor to withdraw their funds from the account at will (on demand). This is a basic checking account that allows account holders to withdraw money at will using checks, bank cards, or withdrawal slips. While the time deposit is an interest-yielding deposit made by the depositor. Here, the depositor cannot withdraw the money on demand unless after giving the bank fore-notice. Such deposits may yield interests on a monthly basis or otherwise, therefore, the depositor must give the bank a 30-day notice before making a withdrawal.