Bank deposit

Bank deposit refers to the act of placing money into a bank for safekeeping. These deposits are made to deposit accounts such as savings accounts, checking accounts and money market accounts. The account holder has the right to withdraw deposited money, as set forth in the terms and conditions governing the account agreement.

Types of Bank Deposits

There are several types of bank deposits, including:

• Demand deposit: Also known as a checking account, a demand deposit account holds money that can be withdrawn by the depositor at any time.

• Time deposit: Also known as a term deposit, this is a money deposit at a banking institution that cannot be withdrawn for a certain "term" or period of time. When the term is over, it can be withdrawn or it can be held for another term.

• Savings deposit: These accounts offer interest on the deposited amount, but withdrawals are limited.

Interest on Bank Deposits

Banks pay interest on deposits. The rate of interest is determined by the central bank's policy and the bank's own interest rate policy. The interest is usually paid on the principal amount, which is the money deposited by the customer in the bank.

Insurance on Bank Deposits

In many countries, bank deposits are insured by a government agency (such as the Federal Deposit Insurance Corporation in the United States) up to a certain amount to protect depositors in case of the bank's insolvency.

See Also

• Bank
• Central bank
• Interest rate
• Federal Deposit Insurance Corporation