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demand deposit

noun

Definition of demand deposit

: a bank deposit that can be withdrawn without advance notice

Examples of demand deposit in a Sentence

Recent Examples on the Web

 Checking accounts and demand deposits would bear a -4% or -5% interest rate. — Charles Eisenstein, Quartz, "How a game of musical chairs can help explain our broken economy," 27 Aug. 2019 The Swiss reform would move all demand deposits from private banks to the SNB and tie its hands in costly ways (although the proposal is unlikely to pass, polls suggest a surprising third of the population are in favour). — The Economist, "Central banks should consider offering accounts to everyone," 26 May 2018 The company’s troubles accelerated after news of financial stress prompted some suppliers to demand deposits and payments in advance, according to court papers. — Lillian Rizzo, WSJ, "Regional Grocery Stores Feel the Squeeze," 12 Aug. 2017

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'demand deposit.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of demand deposit

1923, in the meaning defined above

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More Definitions for demand deposit

demand deposit

noun

Financial Definition of demand deposit

What It Is

A demand deposit is an account with a bank or other financial institution that allows the depositor to withdraw his or her funds from the account without warning or with less than seven days' notice. Demand deposits are a key component of the M1 money supply calculated by the Federal Reserve.

How It Works

Checking accounts are an example of demand deposits. They allow the depositor to withdraw funds at any time, and there is no limit to the number of transactions a depositor can conduct with these accounts (although a bank may charge a fee for each transaction).

Unlike other types of retail financial accounts, Federal Reserve Regulation Q prohibits banks and financial institutions from paying interest on demand deposits. However, merchandise, credit and cash payments to a depositor are allowed if they are paid when the depositor opens the account, the institution does not give the depositor more than two payments a year, and the value of each is not more than $10 for deposits of less than $5,000 and $20 for deposits of more than $5,000.

Why It Matters

Demand deposits are important to consumers because they often house the funds to pay day-to-day expenses. Without the ability to obtain funds on demand, depositors would not be able to make any purchases without first telling the bank.

The amount of demand deposits an institution has often dictates all or part of the reserves it must keep on hand either in vault cash or on deposit with the Federal Reserve; the more dollars an institution has in demand deposits, the more dollars it must keep in reserves.

Source: Investing Answers

demand deposit

Legal Definition of demand deposit

see deposit sense 2a

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