Demand Deposit

Search for glossary terms (regular expression allowed)


Term Definition
Demand Deposit

A bank account where funds can be withdrawn anytime without notice

A demand deposit is a type of bank account that allows you to withdraw your money at any time, without any prior notice. They are highly liquid and accessible, making them ideal for everyday transactions like paying bills, shopping, or transferring funds.

Here are some key features of demand deposits:

  • Immediate access: You can withdraw your funds through various methods like ATMs, checks, debit cards, or online transfers.
  • No notice required: Unlike some other types of accounts, you don't need to inform the bank in advance before making a withdrawal.
  • Low or no interest: Demand deposits typically offer low or no interest on the deposited funds, as they prioritize accessibility over earning potential.
  • Common types: Checking accounts and savings accounts are the most common examples of demand deposits.

Here's a table summarizing the key differences between demand deposits and other types of accounts:

Feature Demand Deposit Time Deposit
Accessibility Immediate access Requires advance notice (days, months)
Interest rate Low or none Typically higher
Liquidity Highly liquid Less liquid
Common types Checking, savings CDs, money market accounts

Advantages of demand deposits:

  • Convenience: Easily access your money anytime you need it.
  • Flexibility: Ideal for day-to-day expenses and managing cash flow.
  • Security: Deposits are insured by government agencies (up to certain limits).

Disadvantages of demand deposits:

  • Low interest: Don't generate significant returns on your deposited funds.
  • Not ideal for long-term savings: Better suited for short-term needs and emergency funds.