Personal Finance

Q&A: What is a deposit?

There are 2 financial definitions of the word that depend on the context:

1. When talking about deposits to a financial institution such as a bank or credit union, it is an amount of money put into an account there.

Real-life Application: Person A has a checking account that has $500 in it and they deposit $50 into it, so the account now has $550 in it.

2. A deposit can refer to a sum of money put down as collateral or security for something (an apartment, a car, a house, etc.).

Real-life Application: Person B wanted to rent an apartment for 12 months, so they put down a deposit of $250 that they will get back when the 12 months is up.

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