A friend and I want to book a house for Labor Day weekend and we found a place on Craigslist that looks pretty nice. I'm pretty well-traveled myself, but neither of us have rented out a house before. Before you all suggest sites like Airbnb or HomeAway, I've been to them and others. Craigslist is just another outlet, out of the many, I've looked at.

My friend emailed the owner who is asking $200/night and a $700 security deposit. I then asked him to see how payment is to be made. Obviously, paying cash is a big no-no, especially with a refundable security deposit. I'm also wary about personal checks, wire transfers, etc. 

Anyway, the owner requested a *bank deposit* for payment and I'm not so sure about that, it sounds kind of fishy to me.

At the very minimum I'd like to use PayPal or a credit card. Obviously Airbnb, Roomorama, or HomeAway are the better alternatives, but I'm assuming that's not an option.

So I guess what I'm asking is:

A) does this sound like a scam and if not 

B) what other ways might I suggest to the owner that I pay such that I can guarantee both his/her and my security?