A bank deposit is defined as funds that are put into a checking or savings account, among other types of financial products. This money is kept safely at a financial institution like a bank or credit union, and it may earn interest in return for keeping your cash there.
You can make bank deposits via cash, checks, online transfers, or direct deposit, among other methods. The type of deposit you make will determine when you can withdraw funds.
Understanding how bank deposits work and the pros and cons of each type of deposit can help you better manage your money. Here’s what you need to know.
Key Points
• Bank deposits store funds securely, potentially earning interest.
• Checking accounts provide easy access for daily transactions.
• Savings accounts offer higher interest rates for saving goals.
• CDs guarantee fixed interest over a set term.
• Mobile deposits enhance convenience, allowing check deposits via smartphone.
What Are Bank Deposits?
A bank deposit involves putting money into a bank account. Your bank deposits can go into various accounts such as a savings or checking account, a money market account, or a certificate of deposit (CDs).
Depositing your money into a bank account can help you accomplish two things:
• It can keep your money safe.
• It can help your money grow.
Here’s a little more detail: Bank deposits are typically insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per depositor, per account ownership category, per financial institution, and in some cases even more. That means your money is a whole lot safer in a bank account than under your mattress.
The other thing you can accomplish by depositing your money is helping it grow. Because many financial institutions offer interest-bearing bank accounts, you can capitalize on compounding interest by not withdrawing funds and also consistently adding to your balance over time.
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How Do Bank Deposits Work?
The type of deposit you make will dictate the process of your cash getting into an account.
For example, when you deposit a check, the bank sends a digital image of the check to the payer’s financial institution. While large banks usually communicate directly to clear checks, other banks work through a clearinghouse or a third-party intermediary to verify checks. The clearinghouse organizes all the deposits coming in and out of a specific bank and ensures all deposits are put in and taken out of the correct accounts.
If the payer’s account doesn’t have enough funds to process the check, it will bounce and be returned unpaid. If you have already taken out the funds from the check, you will have to pay the total balance back, usually plus a fee.
Direct deposits, on the other hand, work a little differently. Since direct deposits are scheduled payments, the payer’s or employer’s bank will credit the account before sending the direct deposit. This way, the payer’s bank can ensure the account has enough money to cover the transaction.
Once the funds are deposited in your bank account, you can access the sum the next business day.
How Long Do Bank Deposits Take to Process?
Process times vary by the financial institution and how the deposit is made. However, federal law limits the time it takes for a bank deposit to process.
• For example, if you deposit checks totaling $275 or less, the bank must let you access the funds the next business day. So, if you deposited checks on a Monday, you should be able to access your money on Tuesday. However, if there’s a bank holiday transactions may be delayed.
• If you deposit a check(s) totaling more than $275 you will have access to the first $275 the next business day. Then, you will have access to the remaining deposit the following business day.
• When you deposit a check from another account from that financial institution, a government check, or a certified check in person at a bank branch, you should have access to the money the next business day.
Keep in mind some banks and credit unions apply cut-off times, which dictate the end of the day. So, if you deposit after the cut-off time, you may have to wait an extra business day before accessing the deposit.
Also, other types of deposits have different processing time. For example, wire transfers and ACH deposits can usually take a couple of days to process but may take longer in some situations.
Here are a few reasons why it can take longer for your deposit to process:
• You’re depositing money into a new account
• You made an ATM deposit to an ATM outside the financial institution’s network
• If you have a deposited check that was returned unpaid
• Your deposits exceed $6,725
• You’ve overdrawn your account too many times.
Recommended: Causes of Overspending
2 Types of Bank Deposits
There are two primary types of bank deposits: demand deposits and time deposits. Here’s a breakdown of each.
Demand Deposits
Demand deposits consist of money you put into a bank account that you can take out when you need cash. Demand deposit accounts usually have minimal interest rates (or no interest), but they give you more freedom to withdraw money when needed. These types of deposits can be made to three types of accounts, including:
• Checking accounts. This type of account is meant for everyday transactions. You can deposit and withdraw money as often as you want. Usually, checking accounts have checks and debit cards linked to them so you can access your money when you’re on the go.
• Savings accounts. This type of account is designed to help you sock your money away for short-term or long-term goals. Since the different types of savings accounts are meant for savings, some banks apply withdrawal limits, limiting the number of monthly withdrawal transactions that can occur in an account.
Savings accounts may also have interest rates higher than checking accounts. This is especially true if you deposit funds at an online vs. traditional bank.
• Money market accounts. This type of account combines the features of a savings account with those of a checking account. Money market accounts let you earn interest, just as a savings account does. They can also provide a debit card and checks so you can withdraw funds more easily.
Time Deposits
A time deposit is when you put money into a deposit account with a fixed rate and term, like certificates of deposit (CDs). You can only take money out of a time deposit account once the term expires. (You may have to pay a penalty if you take money out of the account beforehand. But whether you get a penalty or not depends on the type of account and the financial institution.)
For example, let’s say you deposit $5,000 in a CD that earns 5% interest for one year. Then, after one year, you can withdraw $5,250.00, which includes your deposit and interest earned.
You can think of banks as using time deposit accounts to borrow money from depositors. In exchange for borrowing money for a certain amount of time, the bank usually gives the depositor a fixed interest rate, typically higher than traditional savings accounts. At the end of the term, the depositor can take out the money in the account or renew the time deposit for another term.
Recommended: Savings Account Interest Calculator
What Are Mobile Deposits?
Mobile banking, as you likely know, gives you access to banking services no matter where you are or what time it is. You can make mobile check deposits from your phone as part of this service. So, instead of driving to an ATM or local bank branch, you can deposit it on your mobile device.
The steps involved usually include:
• Download the bank’s mobile banking app.
• Log into your account.
• Choose the account you want to deposit the check into.
• Endorse the back of the check.
• Enter the amount of the check.
• Snap a photo of the front and back of the check.
• Review the deposit information, and then hit deposit.
Remember, though, there can be limits on the amount and type of checks you can deposit on your mobile app. For example, some banks prohibit depositing third-party checks, money orders, traveler’s checks, and foreign checks. So, verify the rules with your bank or credit union.
Also, if you deposit a check using the mobile app, keep the paper check until the check clears. This way, you’ll have a backup if it doesn’t go through or there is an error.
The Takeaway
A bank deposit is money that is given to a financial institution where it is safely held and may earn interest. Examples of deposit accounts are checking and savings accounts, money market accounts, and CDs. When considering where to keep your money, it’s wise to shop around and consider such factors as interest paid and fees charged.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
What are the 2 types of bank deposits?
Demand deposits and time deposits are the two types of bank deposits. A demand deposit references deposits made into an account such as a checking or saving account where you can withdraw the funds at will. A time deposit, on the other hand, refers to a deposit made to an account with a fixed interest rate and set terms (whether several months or years), like certificates of deposits.
What happens if you deposit more than $10,000 in the bank?
When you deposit $10,000 or more into a financial institution, federal law requires them to report the deposit to the federal government. The federal government requires this alert to help prevent money laundering and fraud.
Does deposit mean payment?
Yes, deposits can mean an initial payment towards a product or service. It can also mean putting something of value away for safekeeping, like when you make a bank deposit to a bank, or hand over cash for safekeeping.
About the author
Ashley Kilroy
Ashley Kilroy is a seasoned personal finance writer with 15 years of experience simplifying complex concepts for individuals seeking financial security. Her expertise has shined through in well-known publications like Rolling Stone, Forbes, SmartAsset, and Money Talks News. Read full bio.
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SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet
Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.
Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.
See additional details at https://www.sofi.com/legal/banking-rate-sheet.
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