What Are Checkable Deposits? In this article today we are going to be taking a look at what checkable deposits are. So that you will be able to determine if they make sense in your situation so that you can carry on with it or not. In your financial life, there are certain things that need to know especially if you have a bank account and checkable deposit and part of it.
So read this article to the end if you want to have the full list of everything about checkable deposits so that you can start using it today. We are also going to take a look at how checkable-deposit works and all other technical terms that are associated with checkable deposit accounts. If this sounds good to you then let’s go ahead and jump.
What Are Checkable Deposits?
A checkable deposit account is simply a technical term that is used to describe any demand deposit account that a check or a draft can be written. What this means is that the owner of the account can withdraw funds from it at any time without having to notify the bank using a check or draft. Drafts can include a negotiable order of withdrawal (NOW) or a Super NOW account.
Checkable deposit accounts are highly liquid accounts because the customer can decide to withdraw all of the money without notice to the bank and it will be possible. Checkable deposits and demand deposits can be used interchangeably however they both have a key difference. In demand deposits, there is a limit to the amount of money you can withdraw which is not so for checkable deposits.
How Do Checkable Deposits Work?
Checkable deposits and highly liquid and also payable on Demand so when you request to withdraw a particular amount of money from the account it is given to you immediately. In addition, you can also transfer the money to any third party immediately and it will be done because the accounts is highly liquid and payable on-demand.
For example, if you have five thousand dollars as a checking deposit in a bank you can simply decide to withdraw that $5000 without having to notify the bank beforehand. The money can simply Be withdrawn to checks or drafts instantly because you are operating in a checkable deposit account and then you can use the money for whatever purpose you want.
What Are The Types Of Checkable Deposit Accounts?
Just as I have mentioned above a shakable deposit account can be used interchangeably with a demand deposit account therefore they are basically three types. There are also three types of demand deposit accounts as there are three types of checkable deposit accounts which are listed below:
- Checking account
- Savings account
- Money market account
What Is A Checking Account?
A checking account is an account that your phone can be accessed at any time and also have the ability to give you a debit card and a checkbook. You can use the checkbook and the debit card to withdraw money from a checking account at any time which is not the same for a savings account. A checking account is an account that is basically used for making everyday payments.
A service account as the name implies is not an account that can be used for day-to-day expenses. It is only used to save money which means you do not withdraw money from it on a regular basis. You can use your service account to store money until the purpose of saving the money is accomplished and the money will be used. Usually, there are withdrawal limits in a savings account.
Money Market Account
A money market account is more of a combination between a savings and a current account. What this means is that you have the ability to withdraw money from a money market account on a daily basis and also use it to make or pay bills regularly while having the benefit of a savings account. There is also a debit card and a checkbook tired to a money market account just as a checking account.
What Is The Difference Between Checkable Deposits And Time Deposits?
There is basically one major difference between a checkable deposit and a time deposit account. The difference is also in the name and it is basically the fact that you can withdraw money whenever you like from a checkable-deposit deposit account but cannot do so on a time deposit account. In a time deposit account such as a CD you only wait to withdraw money at specific times not every time.
Pros And Cons Of Checkable Deposits
There are various advantages of a checking account however one of the most important ones is the fact that your money can be accessed at any time any day anywhere. In a service account on a time deposit account your money cannot be accessed every time you only wait for specific times to do that. This can also be a disadvantage for a long time.
Because he cannot be used to save up for long-term goals such as retirement, emergency funds, buying a house, and others. The reason for this is that they have low financial returns not as high as a savings account or a high-yield savings account.
What are checkable deposits Quizlet?
If a checkable deposit account is any account that check can be drawn and can be written to other third parties and also drafted. This means that there is any account that money can be withdrawn from it at any point in time. There are basically three types of checkable deposit accounts which include savings, checking, and money market account.
Are checkable deposits assets or liabilities?
A checkable deposit account is a liability, not an asset because it is money that is owed by the bank to the depositor which means that should they decide to want their money back the bank will pay. This is what makes a checkable deposit account to be a liability in the aspect of the bank.