Bank transaction deposits are monetary deposits made into transaction accounts, also often known as checking accounts. Transaction deposits allow a person to have ready access to their money held at a depository financial institution, such as a bank or credit union, without delay or advance notice.
They differ from non-transaction deposits, which are deposits made into non-transaction accounts, such as certificates of deposit (CDs). Non-transaction accounts come with restrictions on when or how often you can access your money. Learn more about transaction deposits and their pros and cons here.
What Are Transaction Deposits?
A transaction deposit (sometimes also called a demand deposit) refers to a deposit made into a transaction account that is readily available for use — meaning you can use the money any time for other transactions.
The most common example of a transaction account is a checking account. This type of account allows account holders to make unlimited deposits, withdrawals, payments, and transfers. In other words, you can use the account as often as you want to get cash, make purchases, pay bills, and/or deposit cash at an ATM.
Savings accounts that allow account holders unlimited access are also considered transaction accounts. Typically, however, savings accounts may come with withdrawal and transfer limits (such as a certain number per month). As a result, they are generally considered non-transaction accounts.
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Understanding Transaction Deposits
Transaction deposits can be made at a branch of the bank, at an ATM, and by transferring funds from another account. If you set up direct deposit with your employer, these deposits also qualify as transaction deposits.
If you want to access a transaction deposit, you can so for in a number of different ways, including:
• Withdrawing money at a branch or ATM
• Transferring the money to another account
• Writing a check
• Using auto-pay
• Making a wire payment
Transaction Deposits vs Non-Transaction Deposits
To better understand transaction deposits, it helps to know the difference between the two main types of deposit accounts: transaction accounts and non-transaction accounts.
Transaction accounts allow account holders easy access to their money. These accounts may earn interest, but typically they do not.
Non-transaction accounts, such as most savings accounts, money market accounts, and certificates of deposit (CDs) typically earn interest, providing a return on the account holder’s investment. However, deposits made into a non-transaction account (called non-transaction deposits) are not as fully accessible as transaction deposits. Account holders may be limited or restricted from accessing all or some of the money, or they may need to make a request for a withdrawal.
For example, if you open a CD, your money is locked up for a certain period of time. If you want to access the money before the CD matures, you will typically pay a penalty. With many savings and money market accounts, the bank will impose limitations on the number of transactions you can make each month. If you exceed that limit, you may be charged withdrawal fees.
Here’s a look at transaction accounts vs non-transaction accounts:
| Transaction Accounts | Non-Transaction Accounts |
|---|---|
| Unlimited number of transfers or payments to third parties | There may be a limit on the number of withdrawals and transfers of money that are allowed per statement period |
| Typically not interest-bearing | Typically interest-bearing |
| Can make an unlimited number of transfers between your own accounts at the same institution | May have penalties for withdrawing too much money or too many times |
| Payable on demand | May require seven days notice to withdraw funds |
| No maturity period | May be subject to a maturity period |
| Examples include checking accounts | Examples include money market deposit accounts, certificates of deposit, and savings accounts |
Real-Life Examples of Transaction Deposits
A checking account is an example of a transaction account where transaction deposits are made. The key feature of a transaction account, and the deposits made into it, is that the money is liquid, or readily available. There are no requirements for leaving the money for a set amount of time like there are with a time (or term) deposit account, such as a CD.
Here are some common examples of transaction deposits:
• Direct deposits from your employer into your account
• Check or cash deposits made at your bank
• An electronic funds transfer (EFT) made into your account
• Payments from third parties
• Refunds from vendors
Restrictions of Transaction Deposits
There are some instances, however, where a bank may impose some restrictions or a waiting period on certain deposits made to transaction accounts. This could happen if you deposit a large check that requires verification, or if the account is new and the account holder doesn’t yet have an established history. Once the holding period ends, the funds are fully accessible.
Non-transaction deposits, however, come with far more restrictions. In the past,
The Federal Reserve’s Regulation D restricted withdrawals from money market accounts and savings accounts to six per month. If you went over this limit, the bank would charge you a fee. If you consistently went over this limit, they could convert the account to a regular (non-interest-bearing) account.
However, the Federal Reserve suspended Regulation D in 2020. Banks can now set their own restrictions on savings account transactions, and they can vary from one bank to another. In other words, some financial institutions still limit savings accounts to those six transactions; check with your bank or read the fine print on your account agreement.
Recommended: How Long Does the Direct Deposit Transaction Take?
Advantages of Transaction Deposits
There are a number of advantages that come with transaction deposits. These include:
• Money is readily available
• No maturity period
• No eligibility restrictions
• No limit on the number of deposits, withdrawals, or transfers the account holder can make
• No early withdrawal penalties
• Sometimes interest-bearing
Disadvantages of Transaction Deposits
The main disadvantage of transaction deposits is that the money being deposited will generally earn no, or only a small amount of, interest.
The Takeaway
A transaction deposit is a deposit made to a transaction account, such as a checking account. This type of account is ideal for everyday banking, since you can generally put money in and take money out whenever you like.
Non-transaction deposits are the opposite — they are funds put into non-transaction accounts, which include savings accounts, money market accounts, and CDs. With a non-transaction account, you will face some restrictions in when and how often you can access your money. However, the advantage of non-transaction deposits is that this money will typically earn more interest than a transaction deposit will.
If you’re interested in getting the benefits of both types of accounts in one, consider what SoFi offers.
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 is a bank deposit transaction?
A bank deposit transaction is a deposit into a transactional bank account, such as a checking account. It includes direct deposits, transfers, and deposits made at a bank or ATM.
Is a deposit considered a transaction?
Yes, a deposit is considered a transaction. Any money moving into and out of your account is considered a transaction.
What banks offer transaction deposits?
Any bank that offers a checking account is a bank that offers transaction deposits.
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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, 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 Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
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