Types of Bank Accounts
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TYPES OF BANK ACCOUNTS 1)Savings Bank Account: Savings Bank Accounts are meant to promote the habit of saving among the citizens while allowing them to use their funds when required. NOTE: -The rate of interset is very lov in Saving bank account. -The main advantage of Savings Bank Account is its high liquidity and safety. -Maximum 25 transactions in a day is allowed. 2)Bank Fixed Deposits: Bank Fixed Deposits are also known as Term Deposits. In a Fixed Deposit Account, a certain sum of money is deposited in the bank for a specified time period with a fixed rate of interest. The rate of interest for Bank Fixed Deposits depends on the maturity period. It is higher in case of longer maturity period. NOTE: -There is great flexibility in maturity period and it ranges from 15days to 5 years. 3)Current Account: Current Account is primarily meant for businessmen, firms, companies, public enterprises etc. that have numerous daily banking transactions. Current Accounts are cheque operated accounts meant neither for the purpose of earning interest nor for the purpose of savings but only for convenience of business hence they are non-interest bearing accounts. NOTE: -There is no restriction on the number and amount of deposits. There is also no restriction on the withdrawals. -Generally bank does not pay any interest on current account. Nowadays, some banks do pay interest on current accounts. -Current account is of continuing nature and as such there is no fixed period. -Current account enables the account holder to obtain overdraft facility.
4)Demat Account: Demat refers to a dematerialised account. Demat account is just like a bank account where actual money is replaced by shares. Just as a bank account is required if we want to save money or make cheque payments, we need to open a demat account in order to buy or sell shares. 5)Recurring Bank Deposits: Under a Recurring Deposit account (RD account), a specific amount is invested in bank on monthly basis for a fixed rate of return. The deposit has a fixed tenure, at the end of which the principal sum as well as the interest earned during that period is returned to the investor. NOTE: -The period of deposit is minimum six months and maximum ten years. -The rate of interest is higher. -The bank provides the loan facility. The loan can be given upto 75% of the amount standing to the credit of the account holder. E-BANKING (NET BANKING): Banking activity carried on through computers and other electronic means of communication is called ‘electronic banking’ or ‘e-banking’. 1) Automated Teller Machine: Banks have now installed their own Automated Teller Machine (ATM) throughout the country at convenient locations. By using this, customers can deposit or withdraw money from their own account any time.
2) Debit Card: Banks are now providing Debit Cards to their customers having saving or current account in the banks. The customers can use this card for purchasing goods and services at different places in lieu of cash. The amount paid through debit card is automatically debited (deducted) from the customers’ account. 3) Credit Card: Credit cards are issued by the bank to persons who may or may not have an account in the bank. Just like debit cards, credit cards are used to make payments for purchase, so that the individual does not have to carry
cash. Banks allow certain credit period to the credit cardholder to make payment of the credit amount. Interest is charged if a cardholder is not able to pay back the credit extended to him within a stipulated period. This interest rate is generally quite high. 4)Net Banking: With the extensive use of computer and Internet, banks have now started transactions over Internet. The customer having an account in the bank can log into the bank’s website and access his bank account. He can make payments for bills, give instructions for money transfers, fixed deposits and collection of bill, etc. 5)Phone Banking: In case of phone banking, a customer of the bank having an account can get information of his account, make banking transactions like, fixed deposits, money transfers, demand draft, collection and payment of bills, etc. by using telephone .
4)Demat Account: Demat refers to a dematerialised account. Demat account is just like a bank account where actual money is replaced by shares. Just as a bank account is required if we want to save money or make cheque payments, we need to open a demat account in order to buy or sell shares. 5)Recurring Bank Deposits: Under a Recurring Deposit account (RD account), a specific amount is invested in bank on monthly basis for a fixed rate of return. The deposit has a fixed tenure, at the end of which the principal sum as well as the interest earned during that period is returned to the investor. NOTE: -The period of deposit is minimum six months and maximum ten years. -The rate of interest is higher. -The bank provides the loan facility. The loan can be given upto 75% of the amount standing to the credit of the account holder. E-BANKING (NET BANKING): Banking activity carried on through computers and other electronic means of communication is called ‘electronic banking’ or ‘e-banking’. 1) Automated Teller Machine: Banks have now installed their own Automated Teller Machine (ATM) throughout the country at convenient locations. By using this, customers can deposit or withdraw money from their own account any time.
2) Debit Card: Banks are now providing Debit Cards to their customers having saving or current account in the banks. The customers can use this card for purchasing goods and services at different places in lieu of cash. The amount paid through debit card is automatically debited (deducted) from the customers’ account. 3) Credit Card: Credit cards are issued by the bank to persons who may or may not have an account in the bank. Just like debit cards, credit cards are used to make payments for purchase, so that the individual does not have to carry
cash. Banks allow certain credit period to the credit cardholder to make payment of the credit amount. Interest is charged if a cardholder is not able to pay back the credit extended to him within a stipulated period. This interest rate is generally quite high. 4)Net Banking: With the extensive use of computer and Internet, banks have now started transactions over Internet. The customer having an account in the bank can log into the bank’s website and access his bank account. He can make payments for bills, give instructions for money transfers, fixed deposits and collection of bill, etc. 5)Phone Banking: In case of phone banking, a customer of the bank having an account can get information of his account, make banking transactions like, fixed deposits, money transfers, demand draft, collection and payment of bills, etc. by using telephone .
