Types of Personal Accounts in Bank
Mainly the money can be deposited with a bank-in-following types of accounts.
(i) Current Account: In a Current Account, money can be deposited as often as desired and also, it can be withdrawn without notice as often as necessary. In this account, with the permission of the bank, the amount withdrawn can be in excess of the amount deposited; the excess amount withdrawn is called overdraft. Genera no interest is allowed by banks on deposits in current accounts. On the other hand, a charge is made by the bank, known as bank charges periodically. The client can instruct the bank to collect money, say interest or dividends on investments made by the client and to make payments say premiums of insurance policy on his behalf. The bank credits the client’s account with such collections made and debits the client’s account with such payments. It charges money for such services; the amount of the charge is debited by the bank to the client’s account. Businessmen invariably prefer the current account to other types of accounts as this type of account alone meets all their requirements.
(ii) Savings Account: In a Savings Bank Account, deposits can be made as often as required but there are restrictions on the number as well as amount of withdrawals that can be made and hence a savings bank account fails to meet the requirements of most of the businessmen. But this account has the advantage that bank allows interest on the deposits made in it. This account is really meant for individuals who wish to save or institutions which do not need withdrawals very often.
(iii) Fixed Deposit Account: In a Fixed Deposit, money is deposited only once and cannot be withdrawn before the expiry of that period for which it is made. The bank pays interest on such deposits. Fixed deposit is evidenced by a receipt called Fixed Deposit Receipt issued by the bank in the name of the depositor. The receipt has to be surrendered to the bank on the expiry of the term on the stipulated date for withdrawal of money deposited and interest allowed thereon by the bank.
(iv) Recurring Deposit Account: In Recurring Deposit Account, a fixed amount of money is deposited every month for a fixed tenure mostly ranging from one to five years. The small monthly saving in the Recurring Deposit Scheme enable the depositor to accumulate a handsome amount on maturity. The bank pays interest on such deposits compounded quarterly at a fixed rate.