Deposit Accounts

1
Deposit Accounts
Created By Laura Kinchen
2
Two Categories

• Transaction deposits
• An account that allows transactions to occur at
  any time and in any number. AKA demand deposits
• Time deposits
• Deposits held for or mature at a specified time.
  

3
Transaction Accounts

• Demand Deposits payable on demand whenever the
  depositor chooses
• Checking Account most common form offers
  customers quick access to their money and a
  convenient way to pay bills or transfer funds to
  other institutions.

4
Checking Accounts

• Basic-Offer a few simple services for minimal
  cost
• Interest-bearing checking-Pay interest on the
  balance deposited in the account, but usually a
  minimum balance is required

5
Other types of transaction accounts

• Travelers checks
• Automatic transfer service
• Money Supply M1 and transaction accounts are the
  same!

6
Time Deposits

• Less liquid than checkable deposits not
  currently subject to the Feds reserve
  requirements
• Examples include
• Savings Accounts
• Money Market deposit accounts
• Certificates of Deposit (CDs)
• Various bonds

7
Savings Accounts

• Banks may require up to a 7-day notice to
  withdraw funds
• Statement Savings Accounts
• Provide a monthly or quarterly statement
  detailing account activity, including fees and
  interest earned.
• Lower interest rates than other time deposits
  because it is the most liquid

8
Money Market Deposit Accounts

• MMDAs offer a higher rate of interest than
  savings accounts, but they usually require a
  higher initial deposit to open an account.
• FDIC insured up to 100,000
• Minimum balance usually required
• of Transactions may be restricted

9
Certificates of Deposit

• CDs are certificates offered by the bank that
  guarantees payment of a specified interest rate
  until a designated date in the future (maturity
  date).
• Higher the amount and longer time until maturity
  higher interest rates
• Usually higher than money market accounts and
  savings accounts

10
Assignment

• In groups of 4, research the various types of
  transaction accounts and time deposits offered at
  one of eight banks.
• Provide details about each type of account
• Research should be summarized in a PPT slide