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Which difference best compares Demand Deposits with Time Deposits?

medium Q5 of 15
Banking Awareness - Types Of Bank Accounts
Which difference best compares Demand Deposits with Time Deposits?
ATime deposits have higher liquidity
BDemand deposits allow withdrawal on demand
CDemand deposits earn higher interest
DTime deposits are only for businesses
Step-by-Step Solution

  1. Step 1: Identify withdrawal feature.

    Demand deposits permit withdrawals anytime.

  2. Step 2: Compare with time deposits.

    Time deposits are locked for a period.

  3. Final Answer:

    Demand deposits allow withdrawal on demand → Option B

  4. Quick Check:

    Anytime withdrawal = Demand Deposit ✅
Quick Trick: On-demand access means demand deposit.
Common Mistakes:
  • Linking interest rate with deposit category.
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