What are Checkable Deposits?

Article Summary:

Checkable accounts are accounts in which the customer can withdraw money from a financial institution, such as a bank or credit union, on demand. Some types of checkable accounts even bear interest. Checkable deposit accounts differ from time deposit accounts, in which you can only withdraw money after an allotted time.

Checkable deposits and checkable deposit accounts are accounts in which a person has immediate access to money, otherwise known as on-demand. However, it has become a blanket term for accounts where you are guaranteed instant access to funds.

Most individuals are familiar with having a checking account, which, like its namesake, is the most common type of checkable account. But savings accounts and money market accounts can also be considered checkable accounts. Unlike a checking account, these types of accounts actually make money for the individual holding assets in these accounts because they bear interest.

Types of checkable deposit accounts

There are a few different types of checkable accounts, including some that bear interest and some that do not. These are the most common forms available today.

Checking accounts

Most people are familiar with the term checking account. It’s an account that a financial institution provides that guarantees the money is on demand. In some cases, you will only let you write checks from your checking account. Checkable deposits generally pay no interest, but there are some accounts that offer interest on your checking accounts.

Savings accounts

Savings accounts are another form of checkable deposit account that pays more interest. However, this interest rate is usually tied to the rates of the Federal Reserve System. If that interest rate is low, the savings account’s interest rate is typically low as well.

Currently, the interest rate is around 0.06% for an average savings account in the United States. Unfortunately, this isn’t much better than it was years ago. Back in May 2009, the average savings account interest was only 0.22%. You can see the historical trends in the graph below.

Pro Tip

It’s worth remembering that in periods with high inflation the Federal Reserve tends to raise interest rates in the future. The interest rates you earn from a savings account are directly correlated to the interest rate set by the Federal Reserve. So, you can expect the rates of savings accounts and other deposit accounts to rise when inflation is high.

High-interest accounts

High-interest accounts are accounts that yield more interest than what the national average dictates. That being said, these accounts must be tied to a substantial balance before you can access your funds. Other financial institutions will require a certain amount of transactions per month to have access to a high-interest account or make you pay monthly fees.

Money market accounts

Money market accounts are checkable accounts that offer almost perfect liquidity with higher interest. A customer gives their money to the bank as a deposit, and the bank then buys currency-related instruments on behalf of the customer that offers a yield. Many funds and financial institutions that have assets under management that aren’t invested will have their funds in money market accounts.

For instance, if a hedge fund manages $11 billion, it might not have all the money invested. Maybe they invest $10 billion and leave the other $1 billion sitting in a money market account, earning interest until it is properly deployed or invested. They are still able to access cash and withdraw funds with great ease.

Looking for a way to make sure your money is properly allocated in the right checkable account? Here are some banks with money market accounts offered.

Checkable deposit accounts vs. time deposit accounts

A checkable account is known as a demand deposit account. This is because if you deposit money in a checkable deposit account, it’s on-demand. No matter what, you know that this money will be available to you or whoever it’s meant to be for, instantly. On the other end of this spectrum, there are time deposit accounts.

Time deposit accounts typically offer more interest than checkable accounts, but the money stays locked up for a period of time. Typically, in time deposit accounts, you’ll have recurring deposits or fixed deposits.

  • Recurring deposit. A recurring deposit is where you agree to deposit a specified amount at a certain interval. For instance, you agree to deposit $1,000 in an account on the third of every month. To get all the benefits of the interest accumulation, you must make a deposit into that account on the third of every month. This accumulation of money is locked up for a period of time.
  • Fixed deposit. In a fixed deposit, you give one deposit and are able to withdraw it only after a certain period of time. However, you trade the lack of liquidity that you are able to receive in a checkable account for interest that is above and beyond the market average.


What is a checkable deposit example?

A checkable deposit example is as simple as a checking account. If you deposit $500 in your checking account, you have immediate access to that $500. This is otherwise known as a “demand account” or “demand deposit.”

Are checkable deposits an asset?

Yes, checkable deposits are an asset. They are almost the same as having cash. Therefore, if you have $500 cash under your mattress, this is considered an asset. If you have $500 in your checking account, this is an asset.

What are the three types of deposits?

The three types of deposits in a checkable account are standard accounts (savings and checking), high-interest accounts, and money market accounts.

Key Takeaways

  • Checkable deposit accounts are accounts that are available for you to withdraw money “on-demand.” This means that the funds are immediately available to you, no matter what.
  • The four types of checkable deposit accounts are checking accounts, savings accounts, high-interest accounts, and money market accounts.
  • There is typically a trade-off between higher interest and liquidity of a deposit in an account.
  • A checkable deposit account is different than time deposit accounts because they are always on demand, whereas deposit accounts require capital to remain locked up for a longer duration.
View Article Sources
  1. National Rates and Rate Caps: April 18, 2022 — Federal Deposit Insurance Corporation
  2. What is the difference between a checking account, a demand deposit account, and a NOW (negotiable order of withdrawal) account? — Consumer Financial Protection Bureau
  3. Traveler’s Checks Alternatives: The Definitive Guide — SuperMoney
  4. How Long Does It Take For A Check To Clear — SuperMoney
  5. Bounced Check: What To Do When You Write Or Get One — SuperMoney
  6. Best Checking Accounts | May 2022 — SuperMoney
  7. Best Money Market Accounts | May 2022 — SuperMoney