What does DDA stand for in banking terms?

In banking terms, DDA stands for Demand Deposit Account. This type of account allows customers to deposit funds and withdraw them on demand, meaning that they can access their money at any time without any advance notice. Demand Deposit Accounts are commonly used for everyday banking needs, such as checking accounts, where customers can write checks, use debit cards, and make electronic transfers. These accounts typically do not earn interest, or if they do, the interest rate is usually lower compared to savings accounts.

The concept of "demand" highlights that funds can be withdrawn whenever needed, reflecting the liquidity that these accounts provide to account holders. This flexibility is a key characteristic that differentiates DDAs from other account types, like savings accounts, which may have restrictions on withdrawals.