Demand deposits is ... Features of demand deposits

Demand deposits are tools that enable customers to use the finances placed on them at any time according to their requirements. Their main advantage is high liquidity along with the possibility of their use as a means of payment. The disadvantage is a rather low percentage in comparison with urgent counterparts.

Features of demand deposits

The main features are the following circumstances:

• Funds may be partially or fully withdrawn at any given time.
• Funds can be debited in cash and non-cash.
• For such deposits, financial institutions are required to maintain a certain level of reserve in the Central Bank.

These features determine the order of use of funds along with the accrual of interest on the appropriate type of deposits. In practice, interest on demand deposits is accrued daily on the balance of finances in the account, which is fixed at the close of the banking day. This means that if a client deposits one hundred US dollars during the day and then withdraws two hundred, then interest will be charged on the amount that will be on the account at the close of the trading day. Interest capitalization on demand deposits is carried out according to the agreement, as a rule, once a month.

Opening a demand deposit

Like others, unlimited demand deposits are accounts that are opened by the bank on the basis of an agreement, which is drawn up in duplicate. For individuals, a passport is enough with an expression of desire that the contribution be launched and begin its work. If a client does not have a bank card, social payments can be transferred to it along with scholarships and even a salary.

Package of papers for legal entities

Legal entities can also place their temporarily free funds on demand deposits, however, the opening procedure will provide for the following documents:

• Charter of the enterprise.
• Application for opening an account.
• Card with specimen signatures of persons entitled to apply to the bank to withdraw funds.

It is worth noting that a demand deposit is a convenient, and at the same time reliable way of storing free money that a person may need at any minute, but it is not advisable as part of a profitable and savings deposit, since it is a very low percentage.

Types of deposits

Demand deposits are accounts that customers open in order to freely receive and spend funds that are stored in the bank for settlement of transactions and for payment of daily expenses. They are usually classified according to the ownership and nature of the funds that are in the financial institution.

• Money on current, settlement and budget accounts of enterprises of various forms of ownership.
• Own funds of companies that are intended for capital investment.
• Settlement money and credit balances on correspondent payment instruments.
• Finances of local budgets.
• Credit balances on the accounts of correspondent banks.

Enterprises pay their expenses that are related to settlements with contractors, suppliers, the budget and various funds, they withdraw money to pay employees, and also make other necessary payments. Now consider the issue of rates.

Interest rates on demand deposits

Now we will consider the issue of interest on deposits of the same type in different banks, and also find out the size of interest rates that are threatened in case of early closure of deposits.

So, as can be seen from the table, there are differences in the rate on term deposits in Sberbank and VTB, while the percentage of demand deposits is fixed. True, there are structures offering very favorable rates in the amount of five or even seven percent per annum, but the question of whether it is safe to store funds in them is another topic for discussion. Institutions that offer higher rates include Mosstroyeconombank, IntechBank and others.

Deposit accounts of individuals

Demand deposits are accounts that individuals can issue (i.e. ordinary citizens).

Any deposits are conditionally divided into two large groups: demand deposits and term deposits. The second group is distinguished by a longer shelf life, usually from a year or more. In the case of the execution of an agreement on such a contribution, it will be quite problematic for the client to take funds early. A demand deposit is offered at the lowest interest rate, since partial or full withdrawal of amounts seems possible at any time.

It is worth noting that deposits are a popular and widespread financial service among residents of most states. The main mistake that investors often make is the conclusion of an agreement with new and far from the most reliable banks in the country.

What other types of demand deposits exist?

Organization Accounts

Legal entities also often make deposits in fairly large amounts in order to obtain passive income in the form of accrued interest. Typically, various companies and enterprises place funds in commercial banks that are freed for a certain period.

Most of the proposals of banks that are addressed to legal entities are term deposits for specific periods with fixed interest rates. Such deposits may be irrevocable or revocable in nature, depending on the desire or lack thereof for the management of the investing company to claim the invested amount ahead of schedule.

Deposit Account Transactions

The term “deposit operations” should be understood as the actions of financial organizations that are aimed at attracting funds from legal entities and individuals acting as potential banking customers who open fixed-term deposits on demand. It is noteworthy that the subject of such an operation can be absolutely any enterprise, which does not depend on the organizational and legal form, but, in addition, an individual.

The object of the deposit operation are funds that are deposited into a bank account. As a rule, such operations are carried out as part of the tasks, forms, and also the planning and regulation stages of banking activities, which are established in a preliminary order. Now we will talk about deposits for individuals on demand with Sberbank.

Sberbank Accounts

The interest rate on deposits in this financial institution is not the largest in the country, but the level of trust in the institution in question is one of the highest. Despite the bank's good rating, only deposits up to seven hundred thousand rubles are under state protection. For these reasons, bankers use a higher rate to attract customers with the most profitable deposits.

With the range of monetary services, Sberbank is absolutely all right. The placement of available funds is usually available not only in rubles, but also in other generally accepted currencies (euros or dollars), and, in addition, in pounds sterling, Swiss francs, Canadian dollars and Japanese yens. Upon request, customers choose additional options in the form of opportunities for withdrawing investment on demand. In addition, it is quite possible to partially remove or maximize the overall level of profitability.