A call deposit is money placed with a bank that the depositor can withdraw "on call", meaning on demand or at very short notice, while it still earns interest. The account that holds it is often called a call account. Call deposits are a British and Commonwealth term, used in the UK, Australia, New Zealand, South Africa, Pakistan and elsewhere, and are popular with businesses, charities, professional firms and wealthier individuals who want to keep cash available without leaving it idle.
A call deposit sits between a current account, which is used for everyday payments and pays little or nothing, and a fixed deposit, which pays more but locks the money away. It should not be confused with call money, the overnight lending between banks, although both names come from the same idea of money repayable when called for. Accounts that need a set warning period, such as 30 or 95 days, are usually called notice accounts and are a close cousin.
Call deposits in plain terms
Imagine keeping spare cash with a trusted shopkeeper next door instead of in a drawer at home. He pays you a little for holding it, and whenever you knock on his door and ask, he hands it back, perhaps by the next morning. You give up a small amount of convenience compared with cash in your pocket, and in return the money earns something.
A call deposit is that arrangement with a bank. You cannot usually write cheques or pay bills straight from it, but you can move the money to your everyday account quickly. It is a parking space for cash you do not need today but might need soon.
How call deposits work
Terms vary by bank and country, but call deposits usually share these features:
- Withdrawal on demand or short notice. Some accounts pay out the same day; others ask for 24 hours' or a few days' notice.
- Variable interest. The rate moves with the bank's own rates, which in turn follow the central bank's policy rate and wider interest rates.
- Tiered rates and minimums. Banks often pay higher rates on larger balances, a form of tiered pricing, and may require a minimum opening balance.
- Limited payment features. Money normally moves only by transfer to a linked account; there is no chequebook or card.
- Interest credited regularly. Interest is usually calculated daily on the balance and paid monthly or quarterly, so it compounds.
Call deposits compared with other deposits
| Type | Access | Typical interest | Main use |
|---|---|---|---|
| Current deposit | Immediate, with cheques, cards and transfers | None or very low | Day-to-day payments |
| Call deposit | On demand or short notice, by transfer | Variable, modest | Short-term cash parking |
| Notice deposit | After a set notice period | Variable, higher | Planned spending weeks ahead |
| Fixed deposit | At maturity, early exit penalised | Fixed, usually highest | Money not needed for a set term |
For individuals, a savings account often does the same job as a call account; the difference is mostly in naming and in who the product is aimed at.
Who uses call deposits
Corporate treasurers use call deposits as part of cash management, holding the cash they expect to need within days or weeks and keeping the rest in longer instruments. Some banks pair them with a sweep account that moves surplus balances out of the current account each night. Firms compare call deposit rates with alternatives such as money market funds and treasury bills, which may pay more but are not bank deposits. Banks themselves also place call money with one another and with a correspondent bank, which is the interbank version of the same idea.
Call deposits in bank statistics and regulation
Because they can leave at once, call deposits are classed as demand or sight deposits and counted in measures of broad money (M2). In Pakistan, the State Bank of Pakistan lists call deposits as a separate category in its tables of bank deposits held with scheduled banks, alongside current, savings and fixed deposits, and treats them as demand deposits. Under the Basel III liquidity rules, banks must assume that a share of such short-notice funding could run off in a stress, and hold enough liquid assets to cover it. Large corporate call balances are seen as less stable than small retail savings, so they carry higher assumed run-off rates.
Risks and limitations
Call deposits are safe in the sense that the balance does not fall in value, but they carry some risks. Rates can drop quickly when the central bank cuts its policy rate, and after inflation the real return may be negative. Balances above the deposit insurance limit are exposed if the bank fails, which matters for companies holding large sums. And because they can be withdrawn so quickly, call deposits are among the first funds to leave a troubled bank, as seen in modern bank runs.