What is Deposit? Definition, Meaning, Types, and Examples

A deposit is generally a term used to denote money kept in an account. READ here to explore different types of Deposits with examples
authorImageVarun Saharawat30 Oct, 2025
What is Deposit? Definition, Meaning, Types, and Examples

A deposit is a sum of money held in a bank account or other financial institution that can be transferred from one person’s account to another person’s account. Deposits can be made to save our balance and earn interest on them. These deposits can be withdrawn anytime when needed. Let us read this article to learn more about deposits and their types.

Key Takeaways

  • A deposit is money kept in a bank account for safekeeping.  
  • It can also refer to money used as security or collateral when buying goods or services.  
  • A demand deposit account is like a regular checking account, where you can take out money whenever you need it.  
  • A time deposit account requires you to keep your money in the account for a set period. If you withdraw early, you might have to pay a fee. 

What is Deposit?

A deposit is a sum of money collected, secured, or kept in a bank account or some specific locations temporarily that can be withdrawn when required. Customers can also earn interest on their deposited amount in the bank. There are two major types of deposits, demand deposits and time deposits. Let us know more about them below.

How do deposits work?

Deposits are kept in bank accounts to keep them safe and earn interest. Also, customers can withdraw and make more deposits at any point in time. The interest rates are different based on the bank. However, customers can not withdraw their amount from a timed deposit account before maturity period.  Customers can deposit in their bank via any of the following methods given below.
  • In-Person: Customers can personally visit their bank’s nearest branch and deposit the amount in cash. 
  • Using ATM: Customers can also make deposits of their funds through the nearest ATM.
  • Cheques: Candidates can also deposit through cheques by mentioning their amount and signature on the cheque form.
  • Online net banking: Customers can also earn deposits through online mode. Candidates can use the e-payments method through net banking or bank mobile applications.
Also Read: Difference between Scheduled & Non Scheduled Banks

Types of Deposits

There are two major classifications of deposits mentioned below.  Demand Deposit

1. Demand Deposit

This is one of the most common types of deposits made by people for safekeeping their money. There are no time limits on these deposits and customers can withdraw these deposits at any point in time. They can also earn interest on these deposits.

2. Time Deposits

As the name suggests, time deposits are meant for a fixed interval of time. Customers keep their deposited amount in a bank for a fixed interval of time. They can withdraw these funds only after the completion of their maturity. However, if withdrawn earlier at any point then banks charge a predetermined fee amount.

Types of Demand Deposit Account

Demand deposits are the most frequently used deposit account. There are major types of demand deposit accounts. Let us know about them one by one.

1. Checking Account

A checking account is a bank account that is frequently used by businessmen for frequent cash withdrawals. Customers can withdraw their money without any limit.  However, these checking accounts do not offer any interest to their customers. Some of the services available to the customers are ATMs, Credit Card, net banking, or online net banking.

2. Savings Account

A Savings account is a sum of amount kept for saving in a bank. Customers can also earn interest on their deposits. Candidates can use these accounts to manage their expenses, savings, and investments. Banks also give debit cards, ATMs, online banking, and net banking. 

3. Money Market Accounts

Money market accounts are similar to savings accounts which can be used to deposit money. However, money can be withdrawn from these accounts with the help of cheques.  Also, the number of withdrawals is limited for each month. Customers can also earn interest equal to or higher than savings accounts. Also Read: Recruitment Radar: 9 Tips for Navigating Private Bank Careers

Types of Timed Deposits

Timed deposits are the sum of amounts kept for a fixed unit of time. Customers can earn a fixed amount of interest amount based on their deposits till their maturity period. Some major types of timed deposits are mentioned below.

1. Fixed Deposit

A fixed deposit is a type of timed account that is provided by banks and financial institutions. These types of deposits are kept for a fixed interval for a predetermined period for a few months to several years. The interest earned on a fixed deposit is generally higher than a regular savings account.

2. Recurring Deposits

A recurring deposit is a type of deposits that allow customers to achieve their financial goals and earn monthly deposits through regular monthly deposits. The recurring deposit offers higher interest rates, guaranteed returns, and flexible tenures. Also Read: Private Sector Perks: 10 Reasons to Choose Banking

Examples of Deposit Account 

Example 1: Suppose there is a customer at XYZ bank. He wants to transfer an amount of INR 1000 to his friend ABC. He visited his bank branch and filled out the form while submitting the amount in cash at the branch. The teller at the window submits the amount gives him the receipt and then the fund transfer is transferred to the given account. Now, his friend can use this money to make payments. Example 2: Suppose Amit wants to send an amount of INR 25,000 to his friend’s account Devesh. He can now make this payment remotely through net banking with a mobile application of bank. Amit just needs to enter the required details for validation and send the amount. The amount gets deposited into Devesh’s account. Now, Devesh can use these amounts for making bill payments and other transfers. Example 3: Suppose an individual decides on $5000 to deposit for 12 months. He can do this with the help of a certificate of Deposit (CD) which he can withdraw after 12 months without any penalty. The bank also offers interest rates on the certificate of deposit. However, if individuals need to withdraw funds before twelve months, banks impose predetermined penalties.

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Deposit FAQs

What are deposits?

A deposit is a sum of money collected, secured, or kept in a bank account or some specific locations temporarily that can be withdrawn when required.

What are the types of banks?

There are two major types of banks, demand deposit and timed deposit.

What is a demand deposit?

This is one of the most common types of deposits made by people for safekeeping their money. There are no time limits on these deposits and customers can withdraw these deposits at any point in time. Savings and current accounts are two major types of demand deposits.

What are timed deposits?

Time deposits are meant for a fixed interval of time. Customers keep their deposited amount in a bank for a fixed interval of time. They can withdraw these funds only after the completion of their maturity.