What is Deposit? Definition and Meaning - Ikajo Glossary



Deposit is a definite sum that the bank enterprise receives from the card owner for a determined or indefinite time duration.

Banks apply the placed money as circulating funds that are used to make a profit. Despite the result, the bank pays the participant an additional sum represented by interest payments for using the money.

It is important to know that withdrawing money from a bank is possible for an investor at any time.

In general, banks motivate their clients to allocate their funds for the long term. The formula is the following: the bigger the deposit with a bank is, the larger the percentage rate provided by a financial organization is.

Banking organizations offer clients call deposits and also fixed-term deposits, the contract of which is provided for a specific time frame within which the depositor’s money can be accepted by the bank. It is considered that the most common deposits are term deposits which can be in dollars and euros. Some banking institutions offer to open a deposit in less common currencies, such as francs, yen or pounds, etc. Multi-Currency deposits also exist.

When comparing deposits based on the same conditions, such as amount of deposit, its terms or currency, it is necessary to take into account not only to the percentage rate, but also the interest payment mode, such as frequency (monthly, trimestrial, or other) and direction of payment (for example, to the running account). A depository account in a financial institution provides frequent access to demand funds through various channels. Since money is available on request, this kind of accounts is also called as call accounts.

Deposit accounts provide different flexible payment methods allowing clients to directly effect the payments. Most bank accounts offer an option of direct-deposit, withdrawal or payment through a debit card. There are a few different ways in which money can be granted, such as overdraft and compensating mortgages.

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