Bank Deposits: What They Are, How They Work, and Types

What is a bank deposit?

A bank deposit is money placed into a bank or credit union account—commonly checking, savings, money market accounts, or certificates of deposit (CDs). When you deposit cash, the bank becomes the legal owner of the funds; your account represents the bank’s liability to return that money to you under the account terms.

Key takeaways

• Deposits are held in checking, savings, money market accounts, and time deposits (CDs).
• Deposits are typically insured up to $250,000 by the FDIC (banks) or NCUA (credit unions), with higher coverage possible across different ownership categories.
• Deposits are categorized as demand (withdrawable on demand) or time deposits (funds committed for a set term).

How bank deposits work

When you open an account and deposit money, you give the bank legal title to the cash; the bank owes you the balance recorded in your account. The account holder’s right to withdraw is governed by the account agreement: demand deposits can be accessed at any time, while time deposits require you to leave funds for an agreed period (often with penalties for early withdrawal).

Types of bank deposits

Current (demand) accounts
* Also called checking accounts.
Funds can be withdrawn at any time via debit card, checks, or in-person transactions.
May carry monthly fees that can sometimes be waived by meeting requirements (direct deposit, minimum transactions, minimum balance).

Savings accounts
* Earn interest on deposited funds.
Typically have fewer transaction features than checking accounts but remain relatively accessible.
May charge fees if minimum balance or deposit conditions are not met.

Money market accounts and call deposit accounts
* Money market accounts usually pay higher interest than standard savings accounts but may limit transfers or check-writing privileges.
* Call deposit accounts (also marketed as interest-bearing checking, Checking Plus, or Advantage Accounts) combine easy access with interest earnings.

Certificates of deposit (time deposits)
* Also called CDs, term deposits, or fixed-term accounts.
Pay higher interest rates in exchange for locking funds for a set term.
Early withdrawal usually incurs penalties.

Deposit insurance

In the U.S., the Federal Deposit Insurance Corporation (FDIC) insures deposits at member banks for at least $250,000 per depositor, per ownership category, per bank. Credit union deposits receive similar protection from the National Credit Union Administration (NCUA). These protections help ensure consumer funds are safe if a bank or credit union fails.

Reporting large deposits

Transactions at or above $10,000 can trigger federal reporting requirements. Financial institutions are required to report large transactions to federal authorities; businesses that receive cash payments over certain thresholds may also need to file IRS Form 8300. Banks and regulators monitor large or suspicious transactions to deter money laundering and tax evasion.

The bottom line

Bank deposits are the primary, convenient way most people store money safely while retaining access. Choosing among checking, savings, money market, or time deposit accounts depends on how often you need access to funds, how much liquidity you require, and whether you prioritize higher interest or flexibility.

Sources

FDIC, NCUA, IRS