A deposit is money put into a bank account. You can make bank deposits into many different types of accounts, from checking and savings accounts to CDs. How the deposit works typically depends on the specific type of account.
Let’s explore how bank deposits work, the primary types of deposits you may use and how FDIC insurance fits in.
How do bank deposits work?
Deposits move money from point A to point B. There are several ways that you may accomplish this:
- Cash: You may bring cash to a bank branch and ask the teller to deposit those funds into a bank account. ATMs may also take cash deposits.
- Check: You may be able to deposit checks at a bank branch or ATM. If your bank offers a mobile app, you may have the option of depositing checks using mobile check deposit by endorsing the check and uploading photos of the front and back of the check and then submitting it for deposit.
- Direct deposit: Here, money is sent electronically and securely from one account to another using details like routing and account numbers. Common examples of direct deposit include paychecks, tax refunds and government benefits.
How long does it take for bank deposits to clear?
When you deposit money into a bank account, there may be a delay before those funds are available to use. This is the time it takes for your bank to process the deposit and ensure it will clear. The timing can vary depending on your bank’s deposit guidelines and the deposit method you use.
Depending on the institution, cash deposits may be available immediately or by the next business day.
Direct deposits must be available by the next business day. When you deposit money by check in person, the first $225 must be available by the next business day, while any remaining amount would be released on the second business day.
Tips for first-time depositors
Making your first deposit doesn’t have to be complicated. Here are some rules of thumb that can help you avoid processing delays:
- Double-check your banking details on electronic deposits before hitting send
- Before depositing a check, endorse it by signing the signature line on the back
- Remember that new bank accounts might see longer deposit processing times. For faster access to your money, you might consider using cash or a direct deposit.
What are the different types of deposits?
When you deposit money into a bank account, that deposit may fall into the following categories:
- Demand deposits: You generally don't need to provide advance notice to withdraw money from accounts offering demand deposits, such as checking accounts
- Time deposits: Accounts offering time deposits require you to leave your money in the account for a certain period. For example, CDs may require you to leave money in the account for months or even years.
