Differences Between a Deposit and Withdrawal

By Alice Garbarini Hurley · June 03, 2024 · 6 minute read

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Differences Between a Deposit and Withdrawal

A deposit and a withdrawal are both common banking transactions, but the way they function is completely different. A deposit is money put into a bank account and held there until you need it. A withdrawal is money taken out of your account.

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. Knowing the different methods is important and could even help you manage your finances.

What Is a Deposit?

In banking, a deposit generally means you put your money into a bank account. Deposits add to your funds in the account, and you can use that money to pay your bills, put it toward something like a vacation, or you can keep it there where it may grow over time.

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 an ATM in your bank’s network or, in the case of checks, by using a bank’s mobile app.

You can also receive a deposit by electronic transfer from one bank account to another account. For example, if you are paid by direct deposit, the money moves from your employer directly into your account. Or you could receive a government benefit such as Social Security this way. In addition, you might receive funds from someone else, like a friend, via a mobile payment service like Venmo, and you could then move the money into your checking or savings account.

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

Types of Deposits

There are a number of methods you can use to put money into your bank account. Here are some of the ways to make a deposit:

•   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.

What Is a Withdrawal?

A withdrawal is when you take 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, or wiring the money to someone.

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. And wiring money may come with a fee. Check with your bank to find out.

How a Withdrawal Works

The difference between a withdrawal and deposit is that withdrawals take money out of your bank account. You might withdraw cash from your bank account to put in your niece’s birthday card, write a check (or authorize an electronic payment) to pay the electric bill, or use a mobile payment 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 typically been eased in recent years.

Types of Withdrawals

Just like there are different types of deposits there are also different methods of withdrawing funds. Here’s how to withdraw funds from your bank account when you need them.

•   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 a brokerage account

•   Electronic funds transfer from a linked savings or checking account or via mobile payment P2P services

•   Electronic bill pay (recurring or not)

Similarities and Differences Between Deposits and Withdrawals

Deposits and withdrawals are two of the most common banking terms and transactions. Here are the differences and similarities you should know.

Differences

Deposits

Withdrawals

Adds to bank account balance
Immediately reflected in bank account balance
Transaction can typically 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 ATMs or branches 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.

How Deposits and Withdrawals Are Different

These are some of the key ways in which deposits and withdrawals are different.

•   A withdrawal leaves you with less money in the bank while a deposit puts more money in your bank account.

•   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 as well as your bank.)

•   Check deposits often have to be made at your bank or bank’s branded ATM network locations, or via a bank’s mobile phone app. (Banks that allow you to make deposits at out-of-network ATMs may charge you a fee, plus there may be an ATM fee as well.)

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

The Takeaway

While a deposit adds funds to your bank account and boosts your balance, a withdrawal takes money away, subtracting an amount from the funds you have on balance. There are many ways to conduct each of these transactions. You can do your banking in person or use an array of digital tools to send or receive money. And if you’re looking to set up a bank account, there are many different kinds of accounts to choose from.

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.


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

What is a cash withdrawal?

A cash withdrawal involves taking money out of a bank account in the form of cash. This can be done at an ATM or a physical location of your bank.

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 removes money from the account.


Photo credit: iStock/Eva-Katalin

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4.60% APY
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.


*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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