What Is a Deposit?

Deposits Explained in Less Than 5 Minutes

Woman placing money into her wallet
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In financial terms, making a deposit means that you're placing money in a banking institution for safekeeping or for other purposes. A deposit can be a thing, or it can be an action you take.

You can deposit a check or you can deposit cash. You can also make a deposit by transferring funds from one account to another. The choices can have varying effects on availability of the funds.

Definition and Examples of a Deposit

Banks and credit unions are referring to the money in your accounts when they use the term "deposit." They're holding onto this money for you. Deposits can also refer to other valuables the institution holds for you, such as jewelry in a safety deposit box. You can access financial deposits by spending on that account with a debit card, by paying bills online, by writing checks, or by taking cash withdrawals.

Deposits come in several forms.

Cash Deposits

If you take cash to a bank teller or ATM and ask them to add it to your checking or savings account, this is a cash deposit.

Deposit Accounts

Bank accounts that let you deposit and withdraw money are called deposit accounts. They can include checking, savings, and money market accounts, as well as CDs.

Demand Deposits

Your checking account's deposits are generally available "on demand," which is why they're sometimes called demand deposit accounts, or current accounts.

Certificates of Deposit (CD)

A CD is a deposit you make with a bank or credit union for a specified period of time and for a predetermined amount of interest to be earned on that money. You get your deposit back plus the interest when the CD "matures" and the time period ends.

CDs are also known as time deposit accounts.

Security Deposits

You're usually required to pay a security deposit when you rent an apartment or use certain services. Your landlord or service provider holds that money in an account for safekeeping in case you cause damage to your rental or don't make all your required payments.

FDIC-Insured Deposits

Your bank deposits are insured by the U.S. government in the event your bank fails. Most bank deposits are insured up to $250,000 per bank, per depositor.

Deposits are NCUSIF-insured at credit unions, which is just as safe as FDIC insurance.

How a Deposit Works

You can deposit funds into your account in several different ways.

In Person

You can walk into a bank branch and hand cash or checks to a teller, who will then credit the funds to your account. You can do this at some deposit-enabled ATMs as well. You must typically use a branch ATM or an ATM that your bank owns, but credit union members can often use other credit unions to make deposits if they participate in shared branching.

You must fill out a deposit slip when you deposit cash or checks. The slip tells the bank where you want to put the money, and it creates a record of the transaction. You must also endorse any checks you're depositing by signing the backs and adding any additional information that's required.

Deposits slips or envelopes generally aren't required if you're using an ATM and the ATM is equipped with scanning technology that captures an image of your check.

Follow the ATM instructions carefully if you choose this option because some ATMs do still use deposit slips.

By Mail

You can send paper checks or money orders to the banking institution by mail if they're made payable to you. Ask your bank which address to use for the fastest service, and find out about any other requirements they might have.

Don't send cash through the mail. It's not illegal, but there's no way to get your money back if it's lost or stolen.

Electronic Deposits

The funds go right into your bank account without any action taken on your part if your employer pays you by direct deposit. The money is often available for spending immediately.

You can also transfer money from one bank account to another electronically, making a deposit into the receiving account. These deposits may be available immediately as well if both accounts are with the same bank, or if your bank uses a service like Zelle for money transfers.

You can deposit checks with your bank's app if you have a mobile device with a camera. Just sign the check, add a few details, and submit a picture of both sides of the check to your bank.

You may have to wait for funds to clear before accessing recent deposits in some cases.

Disadvantages of Deposits

You may have to wait to use your money after you make a deposit in some cases. Your bank may impose a waiting period to ensure that there are no problems with the deposit, such as a check drawn on insufficient funds.

The waiting period for availability is longest with personal checks. Government-issued checks and wire transfers into your account are available much more quickly.

Ask a teller or customer service representative about your bank’s funds availability policy to find out how long you'll have to wait.

This waiting period can protect you in some cases. You could bounce your own checks and incur penalty fees if you spend money from what turns out to be a bad deposit. You'd have to repay the bank that money.

Key Takeaways

  • In financial terms, “deposit” means placing money into the care of a bank or other financial institution.
  • Financial institutions and banks offer numerous types of deposit accounts with varying benefits.
  • You can deposit funds by visiting your bank personally, at some ATMs, or by electronically transferring money between accounts.
  • There may be a waiting period after the deposit of checks to ensure that the funds really are available, preventing you from spending money and incurring fees for spending money that really isn't there.