Deposit Bond

A deposit bond is an agreement issued by a bank or financial institution that guarantees full payment by the due date. It is widely used as an alternative to cash deposits on large purchases such as real estate and property, especially when buyers don't have ready cash or savings. The insurance company promises to pay the vendor 10% of the deposit outright, with the full payment deferred until the settlement date. A deposit bond helps you avoid costly delays and keep your savings intact, so that you keep earning interest until payment is due.