What is Demand Deposit Account? Top Advantages for Account Holders

4 June 2024

Synopsis

• Demand Deposit Accounts are those that you can access to withdraw funds anytime.

• Depending on your chosen DDA, you may or may not earn interest on deposits.

• The different types of DDA’s are Savings, Current and Money Market Accounts.
  
  

Indian Banks offer a variety of accounts that you can choose from, based on your needs. You can open accounts that provide high liquidity to fulfil your business needs, and those that offer limited access and have daily withdrawal limits. While you may know these accounts by names such as Current and Savings accounts, in finance, the term used is Demand Deposit Accounts (DDA). Let’s find out what Demand Deposits entail.

What Is A Demand Deposit Account?

Demand Deposit Account (DDA) are accounts where deposited can be withdrawn at any time without any advance notice provided to the bank by the accountholder. Essentially, these are accounts through which you can access your funds through various channels such as ATMs, online banking, and cheques to fulfil your day to day financial requirements.

Types of Demand Deposit Accounts

Following are the types of Demand Deposit Accounts offered by the Indian banks:

• Savings Accounts
  
  One of the most common types of DDAs in India is the savings account. These accounts are designed to encourage you to save money while providing easy access to funds when needed. However, the bank issues limits on the amount you can withdraw and number of times you can make withdrawals.
  
  

• Current Accounts 
  
  Current accounts cater to businesses and individuals who access to a liquid account through which they can withdraw money regularly. There are typically no limits on the number of times you can access these accounts, nor do you have to worry about limits on the amounts you can withdraw.
  
  

Money Market Accounts

Demand deposit Accounts that pay you interest in accordance with the current interest rates determined by the government are known as money market accounts (MMAs). The interest rates offered on these accounts are typically higher than those offered on other accounts.

Advantages of Demand Deposit Accounts

Following are some key benefits of Demand Deposit Accounts:

• Liquidity & Convenience
  
  Demand Deposit Accounts provide high liquidity. You can access your funds whenever needed, making them ideal for managing day-to-day expenses, emergencies, or planned purchases.
  
  

• Safety
  
  Banks in India are regulated by the Reserve Bank of India (RBI), which ensures the safety and security of deposited funds. Additionally, most of these accounts are covered by deposit insurance schemes, providing an added layer of protection.
  
  

• Facilitates Cashless Transactions
  
  With the creation of digital payment methods such as UPI, NEFT, RTGS, and mobile wallets, Demand Deposit Accounts play a crucial role in facilitating cashless transactions. You can seamlessly transfer funds to merchants, friends, or family members without the need for physical currency.
  
  

• Overdraft Facilities
  
  Current accounts often come with overdraft facilities, allowing you to withdraw more money than you have deposited, up to a predetermined limit. This can be particularly useful for businesses or individuals facing temporary cash flow issues.
  
  

• No Advance Notice Required 
  
  Unlike term deposits or fixed deposits, which require advance notice for withdrawal, these accounts offer instant access to funds without any prior intimation. This flexibility makes them suitable for meeting unforeseen expenses or seizing investment opportunities at short notice.
  
  

Open A Demand Deposit Account Of Your Choice With HDFC Bank

Now you can open a Demand Deposit Account of your choice with HDFC Bank. Whether you opt for a savings account to grow your wealth steadily, a current account for seamless business transactions, or a money market account to enjoy higher interest rates on your deposits, HDFC Bank ensures unmatched convenience, security, and accessibility for all your banking needs. Open you Demand Deposit Account with HDFC Bank here.

*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.