Give a brief idea about different types of Bank accounts.
The money deposited in the bank is called a deposit. The money deposited in the commercial banks from the depositors is kept in the name of the depositors. In other words, if anyone deposits money in a bank, he has to open an account in that bank. There are four main types of deposit accounts opened in commercial banks, viz.
1. Savings Deposit Account:
When a person opens a deposit in a bank for the purpose of saving and in the hope of earning interest at the end of a certain period of time, it is called a savings deposit account. The bank offers the opportunity to open such deposits to encourage small savers to save, keep money safe and pay interest on deposits and withdraw money as required.
2. Current Deposit Account:
When an individual opens a bank account in his own name, or in a joint venture of a few individuals, or for business and non-business entities for their financial transactions, it is called a current deposit account. However, mainly business establishments open current deposit accounts. To open such a current deposit account one has to apply in a specific form and deposit a certain amount of money. With this account, the customer can withdraw or deposit money as many times as he wants. No interest is paid on the money deposited here.
3. Recurring Deposit Account:
A deposit that is required to deposit a certain amount of money repeatedly for a certain period of time is called a recurring deposit account. This type of account can be opened for a fixed period of time by depositing one hundred or its multiples (e.g. – 100, 200, 500,… etc.)
4. Fixed or Term Deposit Account:
When a large sum of money is deposited as a deposit for a fixed period of time, it is called a fixed deposit or term deposit. Money is kept as a deposit for a longer period of 3, 6, 9, 12 months, or a few years starting from 7 days. It offers higher interest rates than savings deposits.
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