A deposit is money placed into a bank account for safekeeping. You hand cash to a teller, transfer funds online, or cash a check. The bank records the amount and adds it to your balance. In return, the bank may pay interest. It also uses your deposit to make loans, which is how banking works. Your money does not sit in a vault. It circulates.

Deposits come in several forms. A demand deposit can be withdrawn at any time, like a checking account. A time deposit requires you to leave the money for a set period, like a certificate of deposit, in exchange for a higher interest rate. A direct deposit is an electronic transfer of wages or benefits into an account. A security deposit is money held by a landlord or utility, separate from banking.

Deposits are protected in many countries. The FDIC in the United States insures up to $250,000 per depositor, per bank. Similar schemes exist in Europe, Canada, and elsewhere. That protection prevents bank runs. Without it, a rumor could cause panic and collapse. Deposit insurance is one of the quiet pillars of financial stability. Most people never think about it until they need it.

Common types

• Demand deposit
• Time deposit
• Direct deposit
• Security deposit
• Certificates of deposit