➡ Types of Bank Account
Bank Accounts are classified into four different types. They are,
1) Current Account
2) Savings Account
3) Recurring Deposit Account 4) Fixed Deposit Account
➡ What is Current Account?
▪ Current account is mainly for business persons, firms, companies, public enterprises etc and are never used for the purpose of investment or savings.
▪ These deposits are the most liquid deposits and there are no limits for number of transactions or the amount of transactions in a day.
▪ While, there is no interest paid on amount held in the account, banks charges certain service charges, on such accounts.
▪ The current accounts do not have any fixed maturity as these are on continuous basis accounts.
➡ What is Savings Account?
▪ Savings Account is meant for saving purposes.
▪ Any individual either single or jointly can open a savings account.
▪ Most of the salaried persons, pensioners and students use Savings Account.
▪ The advantage of having Savings Account is Banks pay interest for the savings.
▪ The saving account holder is allowed to withdraw money from the account as and when required.
▪ The rate of interest ranges between 4% to 6% per annum in India.
▪ There is no restriction on the number and amount of deposits. But withdrawals are subjected to certain restrictions.
▪ ▪ Some banks recommend to maintain a minimum amount to keep it functioning.
➡ What is Recurring Deposit Account?
▪ Recurring deposit account or RD account is opened by those who want to save certain amount of money regularly for a certain period of time and earn a higher interest rate.
▪ In RD account a fixed amount is deposited every month for a specified period and the total amount is repaid with interest at the end of the particular fixed period.
▪ The period of deposit is minimum six months and maximum ten years.
▪ The interest rates vary for different plans based on the amount one saves and the period of time and also on banks.
▪ No withdrawals are allowed from the RD account.
▪ However, the bank may allow to close the account before the maturity period.
▪ These accounts can be opened in single or joint names. Banks are also providing the Nomination facility to the RD account holders.
➡ What is Fixed Deposit Account?
▪ In Fixed Deposit Account (also known as FD Account), a particular sum of money is deposited in a bank for specific period of time.
▪ It’s one time deposit and one time take away (withdraw) account.
▪ The money deposited in this account can not be withdrawn before the expiry of period.
▪ However, in case of need, the depositor can ask for closing the fixed deposit prematurely by paying a penalty.
▪ The penalty amount varies with banks.
▪ A high interest rate is paid on fixed deposits. The rate of interest paid for fixed deposit vary according to amount, period and also from bank to bank.