Core Deposits

Core Deposits

Core deposits are the funds that customers regularly keep in their bank accounts. These include checking accounts, savings accounts, and certificates of deposit (CDs) with low interest rates. Unlike money that moves in and out quickly, core deposits tend to stay in the bank for a long time.

For example, when you get your paycheck deposited into your checking account and leave it there to pay bills or save for the future, that money becomes part of the bank’s core deposits. Banks use this stable money to make loans or invest in other income-generating activities. Since banks do not have to pay high interest on these deposits, they are considered a low-cost and reliable source of funding.

Core deposits are especially important during times of market stress. When financial markets are unstable, customers are more likely to keep their funds in these safe, insured accounts rather than move them elsewhere. This gives banks a steady source of funding even when other sources dry up.

In contrast, non-core deposits are funds that can leave the bank quickly. These include large deposits from businesses or short-term investments that chase higher interest rates. Because they are less predictable, banks cannot rely on them as much.

Understanding core deposits helps analysts and investors measure a bank’s stability and long-term health. The more core deposits a bank has, the more solid its foundation tends to be.

Visit GLOBAL ABAS for more insights.

Disclaimer: This post is for informational purposes only and does not constitute financial, legal, or investment advice. Please consult a qualified professional for guidance tailored to your situation.

For personalized support, contact GLOBAL ABAS Consulting, LLC with your specific questions or concerns.

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