Checkable Deposits

Checkable deposits is a technical term for any demand deposit account against which checks or drafts of any kind may be written. (A demand deposit account means the owner can withdraw funds on demand, with no notice.) Checkable deposit accounts include checking, savings and money market accounts. They also include any kind of negotiable draft, such as a negotiable order of withdrawal (NOW) or Super NOW account. (NOW accounts may require seven days written notice before you withdraw money from them, but this is rarely required.)

Checkable deposit accounts are the most liquid accounts a consumer can open. Standard checkable deposit accounts are used for managing daily expenses and offer immediate access to cash. Checkable deposits have check-writing or draft capabilities. Innovative technologies are also increasing the money transfer and transaction capabilities for checkable accounts, providing for faster settlement and instant peer-to-peer transfers.

Personal banking institutions are the primary place to open a checkable deposit account. There are several types.

Standard personal checking and savings deposit accounts typically do not pay interest (or only very little interest) and often require investors to pay monthly fees for holding their assets. As investors increasingly accumulate assets, they may wish to seek alternatives with higher interest payouts and lower fees.

Common alternatives include high-interest checking accounts and money market accounts, both offered through personal banking services. Banks and other financial institutions may also offer special demand deposit accounts, such as Super NOW accounts or accounts that allow for negotiable drafts and negotiable orders of withdrawal.

If you have enough cash, you can find accounts that pay interest of around 1.5% if you keep balances of a certain size in the account – or in that bank. These accounts often have transaction requirements, as well, but they offer much higher interest rates than regular checking accounts, which were yielding an average interest rate of only about 0.6% on Nov. 18, 2018, according to the FDIC.

Provident Bank offers one example of a high-interest checking account with demand deposits. The bank’s Provident Smart Checking Account pays 1.51% annual interest for balances up to $15,000. Investors meeting certain minimum monthly requirements, such as 10 debit card transactions and one direct deposit, qualify for the bank’s high interest rate.

Money market accounts and funds are another option for investors seeking to accumulate wealth in liquid demand deposit accounts. Banks offer money market accounts with interest (see LINK TO MONEY MARKET CAPSTONE] for details. Banks invest these funds in short-term cash instruments, which allows them to pay out the interest to money market accountholders. Money market accounts typically have a limited number of withdrawals, due to the investments backing them. They are usually insured by the Federal Deposit Insurance Corporation.

U.S. Bank offers a variety of money market accounts, including one for retirement. Rates range from 0.04% to 0.10%.