Banking •

February 18, 2023

What is a bank deposit?

A bank deposit is simply money placed into a bank account or other financial product offered by a bank. Here’s how bank deposits work.

Bank deposit image

Whether depositing your first paycheck or bringing an old jar of coins down to your local bank, you’ll be completing a “bank deposit.” But what is a bank deposit, exactly—and what does the term mean for you? 

In this guide, we’ll go over everything you need to know about bank deposits.

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What is a bank deposit? 

A bank deposit is simply money placed into a bank account or other deposit account at a bank. You can make deposits into checking, savings, or money market accounts.

A bank deposit could look like a:

  • Cash deposit at your local bank branch

  • Automatic deposit of your paycheck

  • Mobile app deposit of a check 

  • Transfer from another bank account 

  • Cash or check deposit into an ATM 

Typically, the deposited money is available for use immediately, but it may take a day or two if you’re depositing a check instead of cash. And sometimes, to make a deposit, you have to provide what’s known as a “deposit slip.”

What are the different types of bank deposits? 

Bank deposits most often refer to putting money into a checking or savings account. However, there are actually 2 broad types of bank deposits: “demand” deposits and “time” deposits. 

Types Of Bank Deposits

The type of bank deposit you’re probably most familiar with is a demand deposit. 

Let’s look at the key differences between demand deposits and time deposits.

Demand deposits 

Demand deposits can be withdrawn at any time. Most account types, including checking and savings accounts, use this type of deposit. 

When you make a demand deposit, you can withdraw cash or spend it at any time. There are no restrictions on a demand deposit, and there is also no waiting period or penalty for withdrawing your money. 

Time deposits

Time deposits can only be withdrawn after a certain period—1 year, for example. This type of deposit is common with certificates of deposit (CDs).

CDs and other time deposit accounts tend to pay higher interest rates than standard savings accounts. And in exchange for locking up your funds for a period, you may earn more on your savings than you would under a traditional savings account.

With most time deposit accounts, you can still withdraw before the predetermined period has passed—but you’ll be required to pay a fee. 

How do bank deposits work? 

The money you deposit doesn’t necessarily stay in your account until you take it out again. There’s no pile of cash with your name on it just sitting in a box at the bank. 

So how do bank deposits work?

Well, when you deposit money into a bank account, that money actually becomes the bank’s money, which it can use to offer loans to other people. And so when you make a deposit, the bank then “owes” you that money. A debt is settled when you take money out of your account.

That said, the way deposits work does vary a bit depending on the type of account you’re putting the funds into. 

So when finding a bank, it’s good to check out all your options, including specialty accounts like CDs and money market accounts, in order to find the account that works best for your money needs.

Here are the most common options you’ll want to consider:

  • Checking accounts

  • Savings accounts

  • Money market accounts

  • Certificates of deposits

Physical Bank Branch

Checking account deposits 

Checking accounts are the most common bank account type. 

Deposits into checking accounts can be withdrawn at any time and without restrictions. You can withdraw via cash, check, ATM, or debit card purchase. 

Checking accounts are designed for frequent deposits and withdrawals. There are no restrictions on the number of transactions you can make, and most checking accounts come with both a debit card and a checkbook. 

Savings account deposits

Savings accounts are designed to help you set money aside for goals or general savings. 

What Is A Bank Deposit Slip

In most cases, you can withdraw money from a savings account at any time—but there may be a limit on the number of withdrawals you can make each month. For instance, one limit that used to be common was 6 withdrawals per month—although many banks no longer have this restriction.

Savings accounts tend to pay interest on deposits but may not come with a debit card or checkbook. So you may only be able to withdraw from a savings account in person at a local bank branch or through online bank transfers. 

Money market account deposits 

A money market account is a hybrid of a savings account and a checking account. 

Money market account deposits can typically be withdrawn at any time (like a checking account)—but, like savings accounts, there may be a limit on the number of monthly withdrawals you can make. 

Money market accounts also pay interest, often at rates higher than you may earn from a savings account. They commonly come with a debit card and sometimes a checkbook, so you can withdraw cash in person, online, or with a debit card.

Certificates of deposit 

A certificate of deposit (CD) is a savings product offered by banks and credit unions. 

Unlike the other accounts on this list, a CD is a “time deposit account,” meaning the money can’t be withdrawn immediately.

When you start a CD, you’ll select a timeframe for the account. CDs are available in terms ranging from 3 months to 5 years. You’ll then deposit funds into the CD, and the money will be locked up for the amount of time you choose. 

You’ll have to pay a fee if you withdraw the funds early. For example, if you start a 12-month CD, you’ll be able to withdraw penalty-free after 1 year. However, if you withdraw after 7 months, you’ll have to pay a fee or forfeit some of the interest you’ve earned. 

CDs also pay interest—and often at higher rates than savings accounts. 

Are bank deposits insured? 

Yes, bank deposits are insured. All banks and credit unions in the United States are highly regulated and must provide insurance for customers’ deposits. 

Bank Deposit Insurance

Insurance kicks in if the bank goes out of business, is robbed, or misplaces your funds. These things don’t happen often, but it’s good to know that your money will always be covered, even in extreme situations. 

For most banks, insurance is covered through the Federal Deposit Insurance Commission (FDIC), a federal government agency. Each account is insured for up to $250,000. 

At credit unions, insurance is provided by the National Credit Union Administration (NCUA), another federal agency. Each account is insured for up to $250,000. 

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What is a bank deposit slip? 

Remember that sometimes you may need to fill out a bank deposit slip to make a bank deposit.

A bank deposit slip is a small piece of paper that you may be asked to fill out when making a deposit at a bank. Deposit slips are typically only required for in-person deposits, though sometimes, ATMs require a deposit slip. 

Many banks no longer require bank deposit slips at all.

If you do need to fill out a bank deposit slip, it’s usually pretty simple. Just fill in your account number, name, and the deposit amount, and then hand it (along with your money, of course!) to the bank teller. 


A bank deposit is simply money placed into a bank account. You can deposit cash or checks at your bank, or your employer can send a direct deposit to your bank account. In most bank accounts, you can take your money out anytime. 

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