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Deposit money Definition & Meaning

deposit money meaning

The penalty amount depends on the issuer and the term of the time deposit. Deposit is a term used to denote the money kept or held in any bank account, especially to accumulate interest. The deposit money meaning fund used as a security to get the goods delivered can also be called a deposit. Any transaction processed to transfer money to an entity for safeguarding can be referred to as a deposit.

A demand deposit is a deposit that can be withdrawn or otherwise debited on short notice. A demand deposit is the type of deposit in which the item that has been deposited can be withdrawn at any moment with just only a short notice. A time deposit account is an interest-bearing account that allows the depositor to accumulate money at higher rates of interest than the standard savings account.

deposit money meaning

Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia. An asset is anything you own that you expect to make or save you money in the future. It’s not illegal, but there’s no way to get your money back if it’s lost or stolen.

Disadvantages of Deposits

Ask a teller or customer service representative about your bank’s funds availability policy to find out how long you’ll have to wait. The funds go right into your bank account without any action taken on your part if your employer pays you by direct deposit. 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.

In many cases when a deposit is used, this amount becomes part of the down payment or is applied to the payment of the total amount. The term ‘deposit’ is often used interchangeably with ‘down payment’. However, in some circumstances, there is a distinct difference.


CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The majority of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. 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.

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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. The funds in time deposit accounts are used by financial institutions to provide financial products – such as loans – to eligible businesses or individuals. For making profits, banks lend the funds kept in time deposit accounts at interest rates higher than the ones provided to the depositors. Generally, a person needs to deposit a certain amount to open a bank account.

Special Deposit

The waiting period for availability is longest with personal checks. Government-issued checks and wire transfers into your account are available much more quickly. Deposits are often required on many large purchases, such as real estate or vehicles, for which sellers require payment plans. Financing companies typically set these deposits at a certain percentage of the full purchase price. The other definition of deposit is when a portion of funds is used as a security or collateral for the delivery of a good.

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. A deposit is the act of placing cash (or cash equivalent) with some entity, most commonly with a financial institution, such as a bank. For example, a person buys a certificate of deposit (CD) worth $4,000 at a fixed rate of interest of 5% for a fixed term of two years. At the end of the first year, the deposited fund will become $4,200, and at the end of the term, the deposit amount that can be withdrawn would be $4,410.

What is a Deposit?

In many rental agreements, a security deposit is held to ensure that there is no damage to a property. The deposit may be returned if the item or space is returned in the same condition. For other items, a deposit may be used a partial payment on the balance due. Another usage of deposit occurs when a sum of money is used as a security for the delivery of products or making use of services.

deposit money meaning

This means that, at fixed intervals, a small percentage of the account’s total is added to the amount of money already in the account. Interest can compound at different rates and frequencies, depending on the terms of the bank. It’s commonly seen in real estate or in letting property, or as a security deposit in vehicle rentals, for example. A deposit can also be used when the sales process is lengthy or the final delivery or the product or service will occur at a later date.

In this way, a deposit functions as a type of collateral for the total sale amount, providing increased confidence in the sale. However, if the sale is followed through successfully, the deposit will be applied to the final payment amount – considered as a down payment. Different types of account will give you different rights of access to your money. For example in a term account you might give up the right to take your money out for several years. You can deposit checks with your bank’s app if you have a mobile device with a camera.

deposit money meaning

Some contracts require a percentage of funds paid before the delivery as an act of good faith. For example, brokerage firms often require traders to make an initial margin deposit to enter into a new futures contract. When money is deposited into a bank, it sort of becomes a property of the bank, which is returned to the original owner.

The deposits made into the checking accounts are transaction deposits, implying the funds are liquid and available immediately. A deposit is money held in a bank account or with another financial institution that requires a transfer from one party to another. A deposit can can also be the amount of money used as security or collateral for delivery of goods or services.

  • Most bank deposits are insured up to $250,000 per bank, per depositor.
  • You can deposit funds into your account in several different ways.
  • Ask a teller or customer service representative about your bank’s funds availability policy to find out how long you’ll have to wait.
  • It’s not illegal, but there’s no way to get your money back if it’s lost or stolen.
  • Different types of account will give you different rights of access to your money.
  • In the case of depositing money into a bank account, you can withdraw the money at any time, transfer it to another person’s account, or use it to make purchases.

The other category of depositing funds is the type of funds that is kept by one party as a form of collateral for a good. Such funds are taken at the beginning of any deal and are later used up in case of any damage. So such type of money is not available at all times and cannot be used in any form. 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 returned money is not the original money that was given but is the same amount. But a special deposit is such an amount that is not used up by the bank and is returned to the depositor when needed. This acts as insurance for one party, whereas the other party gets to keep the money that has been deposited. This money can be withdrawn, transferred, or used on any goods.