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Definition of 'Deposit'

A deposit is a sum of money placed in a bank or other financial institution, usually for safekeeping or to earn interest. Deposits can be made in cash, by check, or electronically.

There are two main types of deposits: demand deposits and time deposits. Demand deposits are available for withdrawal at any time, while time deposits have a fixed term of maturity, after which they can be withdrawn or renewed.

The interest rate paid on a deposit depends on the type of deposit, the amount of money deposited, and the length of time the money is left on deposit. Interest rates are typically higher for time deposits than for demand deposits.

Deposits are an important source of funds for banks and other financial institutions. They are used to finance loans and other investments. Banks use the money deposited by their customers to make loans to other customers. The interest earned on these loans is used to pay the interest on deposits and to cover the costs of operating the bank.

Deposits are also an important way for individuals and businesses to save money. They provide a safe place to store money and earn interest. Deposits can also be used to pay for purchases, make investments, or cover unexpected expenses.

Here are some additional details about deposits:

* Deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor per bank. This means that if a bank fails, the FDIC will reimburse depositors for their lost money up to the insured limit.
* Banks offer a variety of deposit accounts, each with its own set of features and benefits. Some of the most common types of deposit accounts include checking accounts, savings accounts, and certificates of deposit (CDs).
* When choosing a deposit account, it is important to consider factors such as the interest rate, the minimum deposit requirement, the withdrawal restrictions, and the maturity period.
* Deposits are an important part of the financial system. They provide a safe place to store money, earn interest, and make payments.

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