when you deposit money into some bank accounts it can earn interest this means that at fixed intervals a small percentage of the account s total is added to the amount of money already in the account interest can compound at different rates and frequencies depending on the terms of the bank 
types of depositsthere are two main types of deposits demand and time example of a depositdeposits are often required on many large purchases such as real estate or vehicles for which sellers require payment plans financing companies typically set these deposits at a certain percentage of the full purchase price a down payment on a home is essentially a deposit you may have to pay a deposit in many rental scenarios whether you are renting an apartment car or another product the deposit is called the security deposit a security deposit s function is to cover any costs associated with any potential damage done to the property or asset rented during the rental period a partial or total refund is applied after the property or the asset is verified at the end of the rental period 5faqs