Banking : Types of Bank Accounts

 

Bank accounts became a necessity for the modern as well as fashionable life. They are more convenient as employing a revolving credit is quicker and simpler than the cash that the people interchange the line, they are safe as money within the bank is insured up to $100k, and plenty of forms of bank accounts pay interest through which one can earn an extra amount of money. If you do not have a bank account, life becomes an unimaginable whether you are a housewife or a student, a business owner or a business house, a retired professional or Indian living abroad.

 

1. Current account : A Current account is an account for the traders, business owners, and entrepreneurs, who have to make and receive the payments and funds. Generally, current accounts seizes more liquid deposits with no limit on the quantity of transactions per day. Current accounts allow the overdraft facility, that is withdrawing more than what is currently available within the account. Also unlike the Savings accounts, where one can earn some interest, these are zero-interest bearing accounts. One  needs  to keep up a minimum balance to be able to operate current accounts. 

2. Savings account : A Savings bank account may be a regular time deposit account, where one can earn a minimum  rate of  interest. Hence, the quantity of transactions you'll make every month is capped. Banks offer a spread of Saving accounts based on the type of depositor, features of the product, age or purpose of holding the account, and  so on,namely as Regular savings accounts, Savings accounts for Youngsters, Senior citizens or women, Institutional savings accounts, Family savings accounts, and lots of more.Some banks also provide  Zero-balance savings accounts advanced with the features like Auto sweep, Debit cards, Bill payments etc.

3. Salary account : Amongst the various sorts of  bank accounts, one’s  Salary account is that the one within which  one  have opened as per the tie-up between one’s  employer and also the bank. This is the account, where salaries of each employee are credited to at the start of the pay cycle and to the last. Generally, employees pick the salary account supported the features or benefits they require or as per their usage. The bank  where one  have a salary account, also maintains the reimbursement accounts; this can be where your allowances and reimbursements are credited.

4. Fixed deposit account : A Fixed Deposit (FD) account is an account which allows you to earn a fixed or set rate of interest for keeping a selected amount of cash locked sure a given time period, that's until the FD matures. Fixed Deposits range between a maturity period of seven days to 10 years. The rate of interest one earn on FDs will vary reckoning on the tenure of the FD. Generally, one cannot withdraw an amount from FD before it matures. Just in case of Premature withdrawal facility the rate of interest earned is lower in some banks.

5. Recurring deposit account : A Recurring Deposit (RD) is that account which incorporates a fixed tenure or time periods. One must invest a hard and fast sum of cash in it regularly, monthly or once 1/4  to earn the  interest. Unlike FDs, where one must to make a payment deposit, the sum that one have to invest smaller and more frequent. One cannot change the tenure of the RD and also the amount to be invested every month or quarter. Even within the case of RDs, one  face a penalty within the type of a lower charge per unit for premature withdrawal. The maturity period of an  RD could range between six months to 10 years.

6. NRI accounts : There are different types of bank accounts for Indians or Indian-origin people living outside India. These accounts are called overseas accounts. They include two types of savings accounts : NRO or Non-Resident Ordinary accounts and NRE or Non-Resident External accounts. 

a) Non-Resident Ordinary (NRO) Savings accounts : NRO accounts are rupee accounts. When NRIs deposit money in these accounts, usually within the foreign currency, it is converted into INR at the prevailing rate of exchange. NRIs can collect their money earned in India or overseas in NRO bank accounts. Payments like rent, maturities and pensions can be sent overseas through NRO accounts. The income earned on these deposit accounts is taxable. 

b) Non-Resident External (NRE) Savings accounts  : NRE accounts are like NRO accounts and also the funds in these accounts are maintained in INR. Any money deposited  into these accounts is converted into INR at the prevailing exchange rates. But  these accounts are just for parking your earnings from the abroad. The funds both the Principal and therefore the Interest, are transferable. But, the interest earned on these deposit accounts is Non taxable in India. 

C) Foreign Currency Non-Resident (FCNR) account : As the name suggests and unlike the other two types of bank accounts, FCNR accounts are maintained  within the foreign currency. The principal and interest earned from these accounts are transferable, but the interest earned is Non taxable in India.