A deposit account refers to a current account, savings account as well as other type of bank  account at a bank, which allows funds to be deposited and withdrawn by the owner of the account. The banks make record of these transactions on their bank books; subsequently, the balance that results is recorded as a liability for the bank, and stands as an amount which the bank owes to the customer. Some of the banks may require a fee for rendering such service while others would rather pay interest on the fund deposited by the customer.

What are the Main Types of Deposit Account?

1. Checking Accounts
This is a deposit account type that the holder keeps with a bank or other financial institution, aimed at safely and swiftly providing constant access to funds when asked for, through a wide range of various channels. Since there is provision of fund on request, these accounts are also known as demand accounts or demand deposit accounts.

2. Money Market Deposit Account
This type of deposit account comes with comparatively high interest rate and short notice or even no notice at all needed for withdrawals. This is a way of immediate access deposit which is subject to federal savings account regulations like monthly transaction limit.

3. Savings Account
This type is maintained by interest paying retail banks but is not directly usable as money – for instance, by writing a check. This account type does not offer much convenience relative to the use of a checking account; however, they allow customers keep liquid assets while earning monetary returns still.

4. Time Deposit
This deposit account type refers to a money deposit at a bank which cannot be withdrawn until a pre-established fixed term or time frame. At the maturity of the term, the fund can be withdrawn or alternatively rolled over for another term. Of course, the longer the preset term for the fund, the better the return on the fund.

Laws Pertaining to Deposit Account
Regardless of the fact that restrictions put on access is determined by the terms and conditions of the account and financial service provider involved, the account holder has the right to get their funds repaid when they make such demand. There may or may not be the possibility of the customer paying the funds in the account by check, EFTPOS, internet banking or other avenues based on the channels or avenues made available by the banking institutions, and offered or made active in regard of the account.

Characteristically, an account holder will not hold the whole amount in reserve, but will give out the money as loans on interest to other clients using the process called fractional-reserve banking.  This process permits the financial service providers to pay out interest on deposit.

Regulatory Protection: Banking Regulation

Usually, banking institutions are subject to prudential regulation in order to minimize the risk of failure of the bank. It can also accomplish reduction of the extent to which a depositor incurs losses in the event of bank failure.