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Differences Between a Deposit and Withdrawal

By Alice Garbarini Hurley · May 22, 2022 · 6 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

Differences Between a Deposit and Withdrawal

If you’re wondering what is the difference between a deposit and a withdrawal, the truth is that they are exact opposites: A deposit is money put into a bank account for safekeeping until you need it. A withdrawal is money that’s taken out of your account. At the most basic level, one of these transactions is about getting money and the other is all about paying, or spending.

But that’s not the full story about deposits vs. withdrawals. You have many choices when it comes to getting money into your account and taking it out. Read on for more about how deposits and withdrawals work, their similarities, and their differences. Once you know the different ways that funds can flow through your accounts, you’ll be that much savvier a financial customer.

What Is a Deposit?

A deposit, from the ancient Latin word deponere, means to “place in the hands of another.” In terms of banking, a deposit means you put your money in the hands of a brick-and-mortar or online bank to safely hold it for you. Deposits add to your funds, which helps your bank accounts pay your bills or stash your cash until you are ready to spend it. This influx of money can happen in a few different ways, which we’ll review in a moment.

How a Deposit Works

A deposit involves adding cash or check(s) to your bank account. You can do this in person at a bricks-and-mortar branch of your bank, at ATMs in your bank’s network or, for checks, by using a bank’s mobile app.

You can also receive a deposit by electronic transfer from one bank account to another account (whether yours or someone else’s). For example, if you are paid by direct deposit, that moves money from your employer directly into your account. Or perhaps you receive a government benefit this way. In addition, you might receive funds via a P2P service, like PayPal or Venmo, and could then move the money into your checking or savings account.

Worth noting: Both bricks-and-mortar and online banks offer many different kinds of deposit accounts. You could consider a high-interest checking or savings account at a traditional or online bank, or, if you don’t need to access the money every day, you may want to look into a money market account or a certificate of deposit (CD).

Whether you are a college student with birthday gift money you want to save or a parent raising a growing family, you can find a place to safely put your money and track it until you need it.

Types of Deposits

There are many ways to put money into your bank account today. A generation or two ago, only cash or a check could do the trick, but now you have many options to top up the funds in your bank. To be specific, here are the ways to make a deposit and give your bank account an infusion of cash:

•   Cash deposit at one of your bank’s ATMs or branches

•   Check deposit at one of your bank’s ATMs or branches

•   Check deposit electronically via your bank’s mobile phone app

•   Payroll direct deposit

•   Electronic funds transfer from a linked savings or checking account or via mobile payment services such as PayPal, Venmo, Cash App, or Zelle

What Is a Withdrawal?

Now, let’s take a look at the other vital aspect of banking: withdrawing, or taking money out of your account. You can do that several ways, including using your debit card at an ATM, requesting the money in person from a bank teller, writing a check, scheduling an electronic bill payment, having the money transferred via a payment app, and wiring the money to someone.

As you may know, some of these methods of withdrawing funds can involve fees. If you use an out-of-network ATM, for instance, you can get hit with a charge. Some companies add a surcharge if you sign up for the convenience of electronic payments vs. writing a and mailing a check.

How a Withdrawal Works

The difference between a withdrawal and deposit is that withdrawals draw, or take, money out of your bank account. You might withdraw cash from your bank account to put in your niece’s Bat Mitzvah card, write a check (or authorize an electronic payment) to pay the electricity bill, or use a P2P service to pay a friend back.

Any funds removed count as a withdrawal. Depending on your bank’s checking account terms, you may have limited or unlimited withdrawals. Often, there are savings account withdrawal limits. In the past, the number was typically six per month, though these restrictions have largely been eased in recent years.

Types of Withdrawals

Let’s take a closer look at how to withdraw or debit funds from your bank account. Know these ways to get money out when you need it.

•   Cash withdrawal at ATM with a bank or prepaid debit card (though there will likely be ATM limits to the amount you may withdraw)

•   Cash withdrawal in person at one of your bank’s branches

•   Checks written from your account

•   Cardless withdrawals of cash using phone app at ATMs in your bank network

•   Bank-issued cashier’s check in person or online

•   Cashing a certificate of deposit (CD) at bank (if this is done before the maturity date, you may owe an early withdrawal fee)

•   Funds transfer from brokerage account

•   Electronic funds transfer from a linked savings or checking account or via mobile payment P2P services such as PayPal, Venmo, Cash App, or Zelle

•   Electronic bill pay (recurring or not)

Similarities and Differences Between Deposits and Withdrawals

Deposits and withdrawals are two of the most common banking terms. Here are the differences and similarities you should know. It comes down to deposit (plus) vs. withdraw (minus). Check this chart for more details.

Differences

Deposits

Withdrawals

Adds to bank account balance
Immediately reflected in bank account balance
Transaction can only be done at in-network ATMS
Cashier’s checks can be managed at your bank branch

How Deposits and Withdrawals Are Similar

Here’s what these two kinds of banking transactions have in common.

•   Both can be done in person at ATM or branch in your bank’s network (except for check withdrawals, which can only be completed in person or online).

•   Both can involve electronic funds transfer from a linked bricks-and-mortar, an online savings or checking account, or via mobile payment services, such as PayPal, Venmo, Cash App, or Zelle.

How Deposits and Withdrawals Are Different

Now, let’s take a look at some of the key ways in which these transactions are different.

•   A withdrawal leaves you with less money in the bank while a deposit puts more money in the bank. In this way, they are opposites.

•   A withdrawal will immediately be reflected in your account balance, while a deposit may take longer to show up, until the funds clear.

•   Cash deposits generally have to be made at your bank or bank’s branded ATM network locations, while cash withdrawals can be made at any ATM. (But beware, if the ATM is out of your bank’s network, you could be charged an ATM fee by both the ATM owner and your bank.)

•   Check deposits have to be made at your bank or bank’s branded ATM network locations, or via a bank’s mobile phone app.

•   Check withdrawals via cashier’s checks, on the other hand, are likely only available in person at one of your bank’s or credit union branches. Alternatively, you could request one online from your brick-and-mortar or online bank or credit union.

The Takeaway

Now you know the difference between a deposit and a withdraw. They are inverse transactions: While a deposit adds funds to your account and boosts your balance, a withdrawal whisks money away, subtracting an amount from the funds you have on balance. There are many ways to conduct each of these transactions today, largely due to tech offering new options. You can now do your banking in person or use an array of digital tools to send or receive money.

SoFi can make banking much better than basic. Our high-interest bank accounts are convenient to set up and use, and we offer a competitive APY. You can also write checks, set up bill pay, and have access to 55,000+ (fee-free) ATMs worldwide. Oh, and did we mention? No account fees, period.

See how much your money can grow with SoFi.

FAQ

What is a cash withdrawal?

A cash withdrawal involves converting funds you are holding in an account (perhaps an investment plan, a trust, or a pension) into cash that you can then deposit elsewhere or use.

What is a cash deposit?

A cash deposit is money that you add to your bank account. It could come via an electronic transfer, an ATM deposit, or currency that you hand off to a bank teller.

What is the difference between a deposit and a withdrawal?

The difference between a deposit and a withdrawal is that a deposit adds funds to your bank account while a deposit takes funds away.


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