Bank accounts are a need for every person who transacts with money. Banks have extended many services for the benefit of account holders and have maximized security for the hard earned money. Earlier banks were meant only for those who were rich however now there are so many options that every person can avail. Following is the insight into the types of bank accounts that are available in India:
Savings account- this is an account which every person is familiar with. Savings account helps to save money and perform daily transactions. If the amount is saved, then the interest would be added onto the account. Savings account is considered to be a flexible account as it allows any number of deposits and withdrawals. Private Banks however insist on a minimum amount that needs to be in the account in order to keep the account operative. Public banks also have a minimum amount however it is very less. Cheque book, credit card, debit card are provided on the savings account.
Current or checking account– this is basically used by companies and business people. Large amounts can be deposited and withdrawn using a current account. Interest isn’t paid on these accounts. A cheque book is the only additional facility that is provided to these accounts. The deposits made into this account are considered to be liquid deposits as the amount isn’t generally saved for long.
Recurring deposit account- It is widely recognized as RD account. The purpose of this account is to encourage savings for those who do not have a major source of income. This account allows to make a monthly fixed deposit and the amount would be accumulated to a large sum. The interest is added onto the amount. The interest that can be earned on this account is similar to fixed or term deposits. The amount thus saved can be used for education, to buy a vehicle etc. This account can also have joint account holders and nominees are also allowed on this account. The term for deposits into this account is fixed. In case the account holder wishes to withdraw the money before the term, they can do so by paying a penalty. A pass book would be provided up on opening a recurring deposit account. Monthly deposits are recorded in the passbook.
Fixed deposit or term deposit account- fixed deposit denotes a deposit that is made for a fixed time period. The amount cannot be withdrawn till the end of that period. The interest would be added on to the account. Fixed deposit is a great way of saving money as the money cannot be touched till the end of the tenure. The other major advantage with fixed deposit is that loans can be taken on the deposit account. The tenure is fixed based on the amount that is deposited. In case of emergencies the amount can be withdrawn after paying a penalty. The terms and the facilities provided for fixed deposit vary from one bank to the other.
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