Bank Account: Meaning And Types
INVESTOPAPER
What Is Bank Account?
A bank account is an account created and maintained by a bank or financial institution in the name of the person or institution. The customers can deposit the money into the bank account. Likewise, they can withdraw the required money from their account at the time of need. Bank account helps for day to day banking transactions. The bank opens an account in the name of the person concerned when taking a deposit (money) from the public and provides facility for depositing and withdrawing money in that account.
After opening a bank account, the saver or customer gets a deposit voucher, pass book and check book. The customers should fill the vouchers while depositing money in the account. The bank fills in the details of the customer’s transactions in the pass book. It provides information about your business, the money in your account, the interest earned on it, and the amount of tax paid on interest earned.
By issuing the check from the check book, the customer can withdraw as much as he needs from the amount deposited in his account. Similarly, if one has obtained the Debit or Credit Card, internet banking facility from the bank, he/she can carry out various financial transactions.
Types Of Bank Accounts:
There are different types of accounts. Of these, there are three major ones: current accounts, savings accounts and term accounts (fixed account). The following accounts are basically operated in banks and financial institutions:
Current Account
A current account is an account where you can keep and withdraw any amount of money you want at any time of the day. There is usually no interest on the money in this account. This account is more useful for industrialists, traders and offices. This is a non-interest bearing account. Thus, it is not for the saving purpose. Rather, it is helpful to carry out large financial transaction.
Savings Account
The customers can deposit the money in the savings account as many times as possible but the amount can be withdrawn only within a certain limit. The bank may have set limits for this. The bank pays a given interest on the amount in this account. This account is usually useful for people who are making small deposits and withdrawing money when needed. Such an account is the most popular among the common people. In recent days, banks have been gradually raising the maximum limit for withdrawals from savings accounts. This account is useful for students, youth, housewives, housewives, old people.
Term Account (Fixed Deposit Account)
The term deposit is fixed for a period of time (3 months, 6 months, 1 year, 2 years and 5 years). However, since it is not possible to withdraw money before the stipulated time, it is advisable to deposit money in such account only when there is no possibility of needing money in between. The interest rate of money kept in this account is also slightly higher than that of savings account.
In case of need, you can withdraw the loan from the banks by pledging the certificate of the amount deposited in such account, but it is not possible to withdraw the amount immediately as in other accounts, so it takes some time to withdraw the amount. When taking a loan in this way, you have to pay a few percent more interest to the bank than the interest rate you get on term deposits.
To Open Bank Account
To open a bank account, you usually need a certificate of citizenship, a photo, a fully filled application form, the required minimum amount, and a signature specimen. In the case of a minor, the guardian’s citizenship, photo, signature on the application form is required. In addition to this, when opening an account, one should provide family details such as father and grandfather’s name so that the identity of nominee is fully reflected. The purpose of this is to make the bank fully aware of the customer.
