A financial institution account from which an account holder can deposit and withdraw funds is referred to as a deposit account. Savings and checking accounts are the most common types of deposit accounts. Many people may also open money market deposit accounts, which usually offer more attractive interest yields than regular savings or checking accounts. Some financial institutions also offer a type of higher-yield savings account that is referred to as a time deposit. An individual deposits money in this type of account and allows it to earn interest until a set amount of time has passed.
A savings account is one type of deposit account. With this type of account, an individual deposits money with a financial institution and can usually withdraw it at will. Unlike with a checking account, however, a person cannot write checks on a savings account. He may, instead, make withdrawals via teller transactions or using an automated teller machine (ATM) card.
A checking account is another type of deposit account a person may open. Like a savings account, a person may use a checking account to deposit and withdraw funds from a financial institution, but checking accounts allow for greater flexibility and easier access to funds. An individual with a checking account can write checks against the money he has on deposit and may find it easier to transfer money to other accounts. Often, checking account holders also have the option of obtaining debit cards that are linked to their accounts. They can use these debit cards to make transactions without writing checks as well as to withdraw money from their accounts via ATM machines.
Money market accounts are also among the deposit account options. This type of account is similar to a savings account, but usually pays the account holder a higher rate of interest. These accounts typically feature higher minimum-balance requirements and charge fees when an account holder falls below the minimum balance. Some may include limited check-writing privileges as well.
A time deposit account is an option for those hoping to save money over a period of time and earn interest on their deposits. With this type of account, a person is usually expected to leave deposited funds with a financial institution for a set period of time. During this time period, the account holder's deposit usually earns more interest than it would with a regular savings or interest-bearing checking account. In most cases, a time deposit account holder cannot make multiple withdrawals at will. If he does withdraw the money he has deposited before the deposit term has expired, he will likely face financial penalties.