A deposit account is an account provided by a bank or other financial institution for customers to save money and earn profit/ interest on cash held in the account.
Deposit account is of two types; 1) Fixed deposits and 2) Savings bank deposits. A deposits account is one which is used by a customer for the lodgment of money which is not likely to be required for some time. When money is left on deposit with a bank the depositor gets a much higher rate of interest on the same than when lodged on current account. These deposits represent loans to bankers and may be either-
- Lodged with the bank for a fixed period; or
- Withdrawable on specific notice; or
- Withdrawable at call or on demand
The amount of each deposit is acknowledge by the bank in a Deposit Receipt Given Having received moneys on current accounts and on deposits from customer, a banker would invest the same by granting loans at call or short notice, or fixed periods, or by way of overdrafts on current accounts, or cash credits. A bulk of the surplus oney would also be utilized by high for discounting bills, i.e., buying up bills before their due dates, or in sound investments.