Understand the types of Bank Accounts

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Understand the types of Bank Accounts

If you consider yourself a banking and accounting novice, then learning about the same strengthens you financially.

This article takes you through the different accounts and talks about their salient characteristics.

Types

Before you do a Bank Account opening, it is essential to know the different account types offered. Most banks provide account holders with Internet Banking facilities, and other provisions such as balance inquiry, NEFT, bill payment, etc., through Mobile Banking.

Savings Account

This saves your money. With your name or together with another user, you can open a Savings Bank Account. It is the most common form used by most homemakers, salaried class employees, pensioners, students, etc. One of the biggest advantages is that the account holder receives interest on their savings. At any moment, the holder can withdraw funds from their account.

In different banks, the interest rates vary, typically between 3% to 7%. You can make a sum deposit. Under this account, the holder must maintain a minimum balance.

Current Account

They are accounts with no maturity. It gets used for people and businesses of the companies. Savings is not the goal here. Such Bank Account holders many many transactions of any amount. The bank does not pay interest for such account holders. In fact, banks levy service fees on Current Accounts. Most banks offer services such as free payments, Money Transfers from anywhere in the country, overdraft facilities, online Bank Account, etc.

Recurring Account

Also called RD Account, they are meant for those who save some money periodically for a specific period and get better interests. You need to deposit a sum of money frequently for a period anywhere between seven days to 10 years. In the end, the account holder gets paid the total sum and the interest amount. Withdrawals from such accounts are not allowed.

Fixed Deposit Account

You deposit a certain sum of money into a bank for a specific period here. It is a one-time deposit and, before that date, you cannot withdraw. However, by paying the penalty, you withdraw your money earlier. Banks pay a high FD interest rate.

You also have the facility nowadays to open such accounts online through mobile banking apps. Make sure to download them and login with your customer ID and password set.