Deposit (finance)

A deposit is the act of placing cash (or cash equivalent) with some entity, most commonly with a financial institution, such as a bank.

The deposit is a credit for the party (individual or organization) who placed it, and it may be taken back (withdrawn) in accordance with the terms agreed at time of deposit, transferred to some other party, or used for a purchase at a later date.

Deposits are usually the main source of funding for banks.

Types

A deposit may take a number of forms, including:

Demand deposit

A demand deposit is a deposit which is deposited for regular withdrawal like saving bank account or current bank account etc.

  • Transactional account (checking account or current account, by country), the depositor has the right to use the money at any time, sometimes short notice periods are agreed. Also called call deposit or sight deposit.

Time deposit

Deposits which are kept for any specific time period are called time deposit or often as term deposit.

  • Term deposit (or time deposit), bear a fixed time and fixed interest rate[1]
  • Overnight lending occurs usually from noon to noon, using a special rate to give as security or in part payment.

See also

References
  1. term deposit, Investopedia, accessed 2012-05-14.
  2. , Deposit your trust in Fixed Deposits, siliconindia.com
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