What is a Demand Deposit Account? One of the best parts of having an account is in fact that you did not have to keep the money in your house and you can simply access it when you go to the bank and withdraw the money for any use.
However, it is not in all cases you can withdraw money from your account without prior notice. That is what brings us to the question today of what is a demand deposit account.
There are so many accounts like savings accounts that do not allow you to withdraw money from the account anytime you like. So it is good to know the type of account that you are opening so that you can better enjoy the benefits of having that type of account. Today we are going to take a look at what age did not deposit account is and everything you need to know about it.
What is a Demand Deposit Account?
The simplest and easiest definition of a demand deposit account is that it is an account where money can be withdrawn at any time without prior notice. You can access your money at anytime you like without having to notify the bank that you want to access your money. These accounts are most useful when it comes to managing the everyday expenses of a person’s life.
You can use this type of account to pay bills withdraw cash and do so many things because money can be pulled from it without having to notify anybody. A demand deposit account DDA can also be referred to as a demand deposit credit DDA credit. The two basic examples of a demand deposit account are a checking account and a savings account.
How Does a Demand Deposits Account Work
Just as I have mentioned before a demand deposit account is an account that can be used for everyday expenses and that is how a demand deposit account works. If you are going to be spending money daily you will be needing a demand deposit account for things such as paying bills, and subscriptions, linking a debit card to withdraw cash, and others. Which are things that you always do daily.
Some people can also decide to make a direct deposit account owned by more than one person for example someone that is married. This means that we have a single direct deposit account and joint direct deposit accounts. It is very much possible for you to own one I want a direct deposit account because banks generally do not impose a limit on the number of accounts you can have.
Types of Demand Deposits
As we have earlier mentioned there are basically three types of demand deposit accounts listed as follows;
- Checking account
- Savings accounts
- Money account
A checking account is the most common form of account which usually comes with a checkbook and a debit card so that you can access your funds anytime you like. this is the time of the month deposit account is mostly used for paying of bills shopping online and everyday activities. there are different types of checking account which includes online, interest-bearing, reward, student, and senior checking accounts.
A service account is the second most popular type of direct deposit account however in a savings account you basically earn more interest rates than checking accounts. But with a savings account, there are certain restrictions that are put in place. Some service accounts will not allow you to withdraw more than six thanks and also make more than six transactions in a month in exchange for higher interest rates.
Money Market Account
A money market account is the combination of both a checking account and a savings account. This is because it gives you a debit card and a checkbook and also allows you to an interest rate just like in a savings account. With a money market account, you cannot also withdraw more than six times a month and the bank might require you to maintain a high account balance.
What is the Difference Between Demand Deposits and time Deposits?
Demand deposit accounts are not the only types of account available there are other account types that are called time deposit accounts. a time deposit account is just as the name suggests meaning that the bank requires you to keep money in the account for a specific period of time without a screwdriver. Any withdrawal before the specified period of time is up will attract a fee.
This is in direct contrast to what a demand deposit account is however for a time deposit account you will be rewarded with high-interest rates higher than a demand deposit account. What’s your time deposit account which is full maturity you can now withdraw the money along with the interest rate you have earned for this particular period of time.
How to Open a Demand Deposit Account
Opening a demand deposit account is very easy to do as long as you have the right credentials to do. This also means that you are opening a normal checking account we should already have. However, if you do not already have a checking account you can open one today. All you need to do is to basically select any bank of your choice can head over there to open an account.
What to look out for when Choosing a Demand Deposit Account
You did not just go to the first bank that you see and open a demand deposit account because there are certain things that you need to look at for so that you have only the best account. Below are some of the things you need to look out for when opening a checking account:
- Monthly maintenance fees
- Other fees, such as overdraft charges
- Minimum balance requirements
- Branch and ATM access
- Mobile and online banking access and features
- Security features
Once you are satisfied with these things you can simply go ahead and open an account.
Is a Demand Deposit Account a Savings Account?
A demand deposit account is a savings account as well as a checking account. This is because those are the two basic types of a demand deposit account. However, there is a third time-of-the-month deposit account which is called the money market account. It is a combination of a savings account and the checking account together.
What is the Advantage of a Demand Deposit Account?
The advantage of a demand deposit account is the fact that you have the ability to withdraw money from it anytime you like. This is why a demand deposit account is always used as an account to take care of everyday expenses.