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Bank Guarantee vs Security Deposit
Understand the trade-offs so you can choose the right security for your lease or contract
Both bank guarantees and security deposits protect beneficiaries — but they differ on cash impact, control, fraud risk, and day-to-day management. This guide explains the differences, when each is appropriate, and how a digital bank guarantee can unlock speed and transparency.
Our Network
Features and Benefits
MyGuarantee offers secure, cost-effective and sustainable digital bank guarantees through an efficient and responsive application process - delivering speed, transparency, accuracy and security.
Fast
Digital requests and confirmation with beneficiaries
Cash Secured
Cash secured with Perpetual and AMP
No Fees
No application fee and no recurring fees
Key Features
Everything you need to deliver a complete MyGuarantee experience.
Same-day processing
Once onboarding is complete, guarantees can be created, approved and activated in hours.
Secure against fraud
Bank-grade encryption, verification, and role-based access controls across every action.
Live tracking
Real-time status from application to issuance, amendments and cancellation.
Reporting
Customisable reports for audit and operations.
Real-time updates
Instant email and dashboard notifications on status changes and required actions.
Full transparency
Clear visibility over every step to build trust with applicants and beneficiaries.
Documents dashboard
Single place to view, manage and download digital guarantees and related files.
Visible audit trail
Immutable, time-stamped logs of changes and approvals - auditor-ready, always.
What’s the difference?
A bank guarantee is a bank’s promise to pay the beneficiary up to a stated amount if obligations aren’t met. A security deposit is cash held (usually by the landlord or principal) and used if a claim arises. Bank guarantees can minimise cash tied up with the counterparty and, when issued digitally, are easier to verify and manage than paper or cash processes.
If you need the “how-to” steps, go straight to how to get a bank guarantee or start your application at apply digital bank guarantee.
Side-by-side comparison
Bank Guarantee
- • Issued by a bank; beneficiary claims directly from the bank.
- • Keeps cash off the beneficiary’s books; improves working capital control for the applicant.
- • Digital issuance & verification reduce fraud and courier delays — see verification.
- • Clear audit trail, role-based access, and online amendments — see setup guide.
- • Widely accepted in commercial leases and contracts — see commercial lease bank guarantee.
Security Deposit
- • Cash paid upfront and held by the beneficiary or in trust.
- • Ties up working capital; release can be slower and administrative.
- • Less structured audit trail; reconciliation required on release.
- • Fewer steps at the start, but less flexible for amendments and staged reductions.
- • Still common for smaller arrangements or where policies mandate cash.
Cost, risk, and acceptance
Total cost depends on amount and term. Review our bank guarantee fees. Digital guarantees reduce operational risk versus paper — fewer manual steps, instant authenticity checks, and reliable audit logs. Learn more in benefits of digital bank guarantees and why many teams prefer digital vs paper.
When to use each option
Choose a bank guarantee when you need stronger governance, clear acceptance, and you want to keep cash centralised. It’s ideal for commercial leases, performance obligations, and tenders. For SMEs, see bank guarantee for small business.
Opt for a security deposit when policies require cash or the arrangement is small and short-term. If you later switch, our guide to where to get a bank guarantee and the digital bank guarantee platform will help you compare options.
Why a digital guarantee is different
With MyGuarantee, issuance, amendments, and cancellations are handled online with role-based access and immutable logs. For urgent needs, see same-day digital bank guarantee or instant bank guarantee online options (subject to eligibility and approvals).
Common questions
Which is cheaper overall?
It depends on amount, term, and policies. Compare your scenario using bank guarantee fees.
Which is faster to set up?
Digital guarantees avoid paper and couriers. If time is critical, explore same-day issuance.
How does the beneficiary claim?
With a bank guarantee, the beneficiary claims from the issuing bank according to the instrument’s terms. For authenticity checks, use verification online.
Ready to choose with confidence?
Apply in minutes and manage everything online — or book a quick demo to see how digital guarantees work in practice.
Explore more topics: digital vs paper · benefits · types · requirements · where to get one · platform · SME issuance