The most secured place to keep your hard earned money is a bank account. Bank accounts help us to manage our personal finances. We can keep a record of our spending habits through bank account statements which helps us to check on our spending habits and builds a habit of saving and investing. In some cases it is mandatory to open a bank account. A salaried employee may most probably be asked to open a bank account so that his/ her salary can be credited to. In case you need to receive subsidies from the Government you must open a bank account. In addition to that personal savings bank account often offers interest on our savings which of course is our free income so why not keep our money in a bank account. Now-a-days banking industry is competitive and are improvising and providing more and more services to people. People now-a-days are more comfortable in digital transactions. Therefore, most of the banks have their own official apps to benefit customers so that customers can easily perform basic banking transactions rather than physically visiting the bank. Some people may find it difficult to choose exactly what type of bank account he/she wants or which suits his needs. Hence, it is important to know the type of bank accounts exists in our country and their features so that one can choose it according to his/her needs. Few of them are discussed below:
Current Account: Though Current bank accounts can be opened by individuals but are most popular among companies, firms, public enterprises, businessmen who generally deal with large number of banking transactions. Current account can be opened in most of the commercial banks. The deposits in a current account are the most liquid deposits being always in the flow and operational also. There is no limit on the number of transactions in current accounts. A customer can deposit and withdraw his/her money any number of time in a day. Generally banks do not offer interest on current accounts. On the other hand, bank charges some service charges on such accounts. Overdraft facility is available with a current account but generally it comes with a fee.
Savings Account: This is the most common and widely preferred deposit bank account by the customers. A savings bank account stores your money safely while earing you interest. Some banks may offer you to open a zero balance savings account which is also called as no frills account. There is a limit on the number of transactions that can be made by customers having a savings bank account.
Fixed Deposit Account: These are popularly known as FD accounts. One can deposit the surplus amount of money he has into the FD account which he/ she doesn’t need for emergencies. The tenure of period of FDs can vary from 7 days to 10 years. The interest rate on FDs varies from bank to bank. Banks also provide loans against the money in your FD. If the customer withdraws the money from the FD account before the maturity period then he/she has to pay a penalty which varies from bank to bank.
Recurring Deposit Account: Recurring Deposit account comes with the flexibility to save a fixed amount of money of customer’s choice for a fixed period. These accounts are popularly known as RD accounts. The tenure of period in this type of account varies from 6 months to 10 years. The interest rate provided by the banks on RDs differ from bank to bank. A customer can get loans against his/her RD account. A minor above 10 years of age as well a major individual can open a RD account. RDs can be opened in single and joint names, nomination is also available. Premature withdrawal of accumulated amount is permitted, however penalty is imposed for amount withdrawal before maturity.
Certificate of Deposit: A Certificate of Deposit (CD) is an agreement between the bank and the investor against the funds deposited by the investor in a dematerialized form for a specific period of time. Premature withdrawal of CD can attract a higher amount of penalty. Not all banks or commercial institutions are allowed to issue CD. The maturity period of CDs issued by banks ranging from 7 days to one year, whereas for financial institutions it ranges from 1 year to 3 years. Banks/ financial institutions do not grant loan against CDs. Additionally, they cannot buy-back their own CDs before maturity period.
DEMAT Account: A DEMAT account (short for Dematerialized account) is an account which hold shares and securities electronically. In India, DEMAT account service is provided by depositaries such as National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) through a depository participant such as a bank. A depository participant acts as an intermediary between the investor and a depository. A DEMAT account is mandatory for the share market transactions. It eliminates theft, forgery, loss and damage of physical certificates.
NRI Account: An NRI account is a bank account opened by a Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) with a bank or financial institution existing in India to meet his/her banking and investment needs. These accounts provide various facilities including currency denomination, transferability of the amount, tax, etc.
