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Types of Bank Account


There are following types of Bank Accounts:


  1. Current Account
  2. Savings Account
  3. Recurring Deposit Account
  4. Term Deposit or Fixed Deposit


Current Accounts are meant for businessmen and are not used for the purpose of investment or savings. These deposits are the most liquid deposits and there are no limits for number of transactions or the amount of transactions in a day.  Most of the current account are opened in the names of firm / company accounts. Individuals doing business can also open current account. Cheque book facility is provided. These accounts are non-interest bearing accounts. Even banks charges service charges on these accounts.


 

Savings Accounts are the most popular kind of individual accounts for personal purpose of saving your investments and getting interest rates. Savings account provides cheque facility along with flexibility for deposit and withdrawal of funds from your account. RBI has deregulated Saving account interest rates and banks have been allowed to decide the interest rate within certain conditions imposed by RBI. Although Public Sector Banks still pay only 4% rate of interest, some private banks pay between 6% and 7% on such deposits.  From the FY 2012-13, interest earned upto Rs 10,000 in a financial year on Saving Bank accounts is exempted from tax. Now banks are also required to open no frill saving accounts.



Fixed Deposits popularly known as FD are available at various schemes with a tenure from 7 days to 10 years. This account is specially designed who want to deposit their savings for a long term to gain good rate of interest. But the interest rate on these accounts varies from bank to bank.



Recurring deposits also known as RD accounts who wish to invest an average amount of their savings on a monthly basis. These accounts can be funded by giving Standing Instructions by which bank withdraws a fixed amount on a fixed date of the month from the saving bank of the customer (as per his mandate), and the same is credited to RD account. These accounts gain interest on the amount available in your account. This account is specially designed for the working public who don’t want to invest a large amount at one instance.