X

Types of Bank Accounts

Every person wants to save his money for the future so that he could use that money to fulfil his purposes and dreams. Bank accounts allow people to save their money in banks. The money deposited in the banks is more secure than the money in your pockets. Some bank accounts also give you the interest on your money. So if you want to open a bank account then there are various types of bank accounts to help you for saving your money. You can choose any of them to save your money.

Types of Bank accounts

There are various types of bank accounts. Here we will discuss the five types of Bank accounts which are commonly used by the Banks:

  1. Current Account
  2. Saving Account
  3. Recurring Account
  4. Fixed Deposit Account
  5. Joint Account
  6. No Frill Accounts

Current Account

The current account is mainly opened for business purposes. These accounts are for business persons, companies, firms, public enterprises, etc. Most of the current accounts are running on the name of companies or firms. These accounts are never used for savings or any type of investment. Normally a minimum balance is required to be always maintained therein. In these accounts, there are no limits on the numbers of transactions and the amount deposited by the transactions in a day. The account holder is free to withdraw the money any time without giving the notice to the bank. The bank does not give any interest on these accounts through the bank charges certain services charges from these account holders.

Facilities and features

  1. Chequebook facility is provided
  2. The account holder can deposit all types and drafts in the account.
  3. The account holder can conduct their business transactions smoothly.
  4. There is no restriction on the number of transactions.

Saving accounts

The savings account is generally used to save the money in the bank account. The person can also earn an income from their savings in these accounts. In the saving accounts, the banks, therefore, impose certain restrictions and also offer a reasonable interest rate.

Restrictions on Withdrawals

The saving accounts are subject to the reasonable restriction given by the RBI regarding the numbers and amount of withdrawals within a specific period. According to the rules, one is allowed 150 withdrawals over one year. The minimum amount of a Cheque is Rs 5. But hardly any bank enforces these laws. However, the bank can use these restrictions if the bank found that the account holder is misusing the account. Before 24/10/2011, the interest on saving accounts was set by the RBI; but after that, the RBI gave this power to the banks to set their interest on saving accounts with some restrictions.

Facilities

  • Chequebook
  • Credit card/ debit card
  • Interest rate

Recurring Account

These accounts are also known as RD Accounts. This account is helpful for the persons who do not have a lump sum amount of money but wants to save a small amount of money every month. The holder of the account put the fixed amount of money in this account by monthly instalments. These accounts are best for future savings if any person wants to save the money for a child’s education, the marriage of a daughter, etc.

The person deposits a fixed amount of money every month in the account. The minimum amount is Rs 100 per month. If a person defaults in payment of the fixed money, a small penalty will be imposed. Some banks also allow the person to deposit a higher amount of instalments, with an upper limit as fixed for the same. The amount can be withdrawn on the fixed date of the month from the bank.

Fixed Deposit Account

Fixed Deposit Accounts are also known as FD Accounts. In these accounts, a particular sum of money is deposited in the bank for a specific period. In this account, the person deposits the money one time and withdraw the money one time. The money once deposited in this account cannot be withdrawn before the expiry of the period set at the time of depositing the money. But in a case, if the person wants to withdraw the money before the expiry period, he can withdraw the same by giving some penalty.

The banks paid the High-interest rates on the FD Accounts though the interest varies according to account deposited.

Joint accounts

The joint bank account is the account that is held by more than one person. Each individual who is in the joint account has the right to deposit and withdraw funds from the account. The joint account can be of any type of account.

No Frill Accounts

The accounts which do not have any minimum balance requirements are known as no-frill accounts.

All these are common types of bank accounts.

Also Read:

Summons| Definition and Substituted service of summons

Mortgage- Definition and Different Types of Mortgage

What is Bailment? Elements and Types of bailment