What Is a Demand Deposit? Demand deposits are deposits that are payable on demand or deposits issued with an original maturity or specified day. Hence, it can also be a deposit which requires a notice period of less than save days.
Well, to most people who are always in need of money at any given time, a demand deposit account is the right and best account for them.
What Is a Demand Deposit
A demand deposit can be accessed at any time and withdraw can be made at any time. A deposit can not be accessed at all until the lock period is served. People deposit their saving in banks, well, some of these people may not have knowledge of the type of account their money rest in.
With a demand deposit, you can withdraw money whenever required. Because the deposit in the bank account can be withdrawn on demand, these deposits are called demand deposits.
What is Demand Deposit Account?
Demand deposit accounts are spending accounts that let you withdraw your cash whenever you need access to it. Demand deposit accounts require no advance notice to the bank or other financial institution from which you are going to withdraw your money.
Just as it sounds, a demand deposit account is one important account that helps improve society’s economy.
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What are the Types of Demand Deposit Account
There are different types of demand deposits which you should know about. One of these types of accounts is a “checking account”, “saving account” and “money market account”.
A checking account is a type of demand deposit account which is most common among the other two types of accounts. It comes with either a debit card or a chequebook so you can use anyone you choose to make withdrawn or pay bills and also buy items online or in-store.
This account is preferred by most people; hence it is very accessible. However, account holders pay the least amount of interest. Some checking accounts do not earn interest at all.
Furthermore, this account has some subsidiary account under it. This includes an online checking account, interest-bearing, reward, and student and senior checking account.
With this type of account, you will earn more interest in saving than you would in a checking account. However, there are certain restrictions that the account holds. These restrictions state that you can not make more than six transfers or withdrawals a month due to regulation D.
Hence, if you go over the limit, your bank may charge a fee or convert your savings accounts. This means you will have to transfer money to another account if you want to withdraw cash via an ATM.
Money Market Account
A money market account is a combination of both a checking account and a saving account. With this type of account, you will have the privilege of accessing a cheque and a debit card at the same time. Furthermore, you can earn higher interest than you would with a typical checking account.
However, the account has its restrictions just like the saving account. In this case, just like the saving account, you are not allowed to make withdraw more than six times in a month. Moreso, it also demands, that you have or maintain a higher balance to get started with a money market account.
Requirement for Opening a Demand Deposit Account
You will need to provide your name, address and telephone number as well as your photograph for proper identification. Furthermore, the account earns taxable interest and you will be required to provide your social security number.
Some institutions or banks will ask you to make an initial minimum deposit at the time you open the account.
Hence, if you want to open an account there is what you should do:
- First, decide the type of bank account you want to open.
- Approach any bank of your choice you love to open an account with and meet its bank officer.
- Fill up the account opening form given to you.
- Give references for opening your account on the given form.
- Then, submit the bank account opening form and documents.
When the above is completed, you should wait for the bank to give you instructions on the next step to take.
Demand Deposit VS Term Deposit
A demand deposit account and a term deposit account are both types of financial accounts offered by banks and most credit unions if not all. The term deposit or time deposit is an account that restricts access to funds for a predetermined period of time.
While a demand deposit account, it has no restrictions whatsoever. As it is accessible by the account holder at any time.
What Does Demand Deposit Mean on a Bank Statement?
A demand deposit account which can also be called DDA is indicated in a bank statement showing that the funds in the account are available for immediate use on demand. It also stands for a direct debit authorization, meaning a transaction, such as a transfer cash withdrawal, bill payment, etc. from the account.
How does a Demand Deposit Account work
Why are deposits with the bank called demand deposits? People deposit their savings in banks. They can withdraw their money whenever required. This is because the deposit in the bank account can be withdrawn on demand. Here is how the account works:
- You will have to open a demand deposit account at your bank.
- Then deposit money in it.
- The bank on the other hand would hold the money for safekeeping.
- Then you can access your money whenever you need it, without receiving approval from your bank.
Your bank, however, may also charge monthly fees for account maintenance. However, you can avoid this fee by maintaining a minimum balance or setting up direct deposits.
How Long Does It Take a DDA Deposit to Clear?
While the funds may be invested in a highly liquid asset, the account holder still must notify the institution that they wish to withdraw money. Hence, depending on the asset in question, it may take a day or two for the investments to be sold and the cash to be available.
Are Demand Deposits Really Money?
Demand deposits or non-confidential money are funds held in demand accounts in commercial banks. These account balances are usually considered money and from the greater part of the narrowly defined money supply of a country.
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