Demand deposits are grouped into two categories: Checking accounts and savings accounts. Although both types of deposits share the characteristic of total liquidity, there are some operational differences between them:
- The fundamental support of checking accounts is the bank statement that financial institutions periodically send to depositors. On the contrary, in savings accounts every movement is usually recorded in a passbook.
- In checking accounts, there is always the possibility of using cheques, while, in general, this is not the case in savings accounts.
Checking accounts can allow overdrafts (the depositor draw down funds for an amount greater than the account balance), while in savings books it is a less common practice.
