Friday 19 July 2024

Types Of Accounts In A Bank

This is an article for beginners to banking that are looking for guidance with their savings and investment decisions. If you have been around the banking block for a while but haven’t yet found out the three types of accounts offered to a saver, read on and know more. The types of accounts mentioned here are similar in banking systems across the globe. While they may be called different names depending on the financial sector of that country, the essence of these accounts do not change. The three types of accounts are current, savings and fixed deposits.

Current Accounts

These are the type of accounts that are used by businessmen and other professionals which require to carry out many transactions a day. The characteristic feature of this account is that minimal or no interest is offered on the money saved in current accounts. This is majorly because none of the money stored in these accounts is loaned out by banks, they are always available for withdrawal. The plus side to this feature is that the money you store in a current account is never locked away, you can access all of it any time you want. Pick a current account if high liquidity and money flow is what you are looking for.

Savings Accounts

This is the most popular kind of accounts with san Francisco banks recording savings accounts as the type of accounts with the highest number. In a nutshell, savings accounts are like the connectors between current account and fixed/recurring deposit. Basically, a large portion of the money is loaned out to investors and the bank retains just enough to cater to regular withdrawals. There is a limit on the amount that can be withdrawn regularly and the number of transactions that can be conducted per day. The interest rate is moderate; higher than current accounts but not as much as savings accounts.

Fixed Deposits

These types of accounts have started gaining immense popularity in San Francisco Bank owing to the high rates of interest offered along with them. These accounts involve the demarcation of a period of time before which your money cannot be withdrawn. For example, if you deposit a large amount of money for a certain maturity period, you can only collect the principal and the interest at the end of the period. If one wishes to pre-pone the withdrawal, a penalty is demanded and no interest is paid.