Why are deposits in banks called demand deposits? What are the benefits of deposits with banks?
People deposit their savings in banks. They can withdraw their money whenever required. Because the deposits in the bank account can be withdrawn on demand, these deposits are called demand deposits. Benefits of deposits with banks are as listed below:
- Apart from money being safely kept in the banks, people are also paid interest on the amount of money deposited in their bank account.
- Deposits also act as direct money in case of cheque payments. Cheques against a deposit settle payments without the use of direct cash.