You are generally under the impression that banks only offer two types of accounts: Savings accounts and current accounts. Banks also offer other kinds of accounts where customers can park idle funds and get interest along with other benefits. These are 5 different types of bank accounts and their features:
Savings account is a type of account that can be opened by a depositor at the bank. This account is used to deposit money and earn interest. One of the main benefits is the liquidity of the saving bank account. A customer can access the account as per his requirements, and withdraw money whenever needed.
You can put aside money which is not required immediately. The interest earned on these accounts is based on the minimum average balance maintained in the account. Banks are free to decide the rate of interest on the savings bank account and the rate of interest varies across banks. Currently there are few banks that offer interest rate as high as 6-7% a year on daily or saving bank accounts.
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SEE ALSO: Savings Accounts
Listed below are some of the features and benefits of a savings bank account:
In India, checking account is known as ‘current account’. Current accounts are very popular in India. These accounts are apt for those who have regular transactions, especially businessmen. The current account can also be used for deposits and withdrawals along with other transactions.
These accounts are also known as demand deposit accounts. Most of the commercial, rural as well as co-operative banks, have the facility of current accounts. Current accounts are mostly availed by businessmen as single or joint accounts, due to the large number of transactions they carry out on a regular basis. However, the deposits that remain in the current account do not earn any interest.
A recurring deposit is a special type of account that helps depositors invest money. Recurring deposit is very popular and the deposits in these accounts earn compound interest on a quarterly basis. You can open a recurring deposit account as the minimum balance required is just Rs 100.
RD account can be opened at any bank or post office. Longer the tenure of the monthly deposits higher the interest. A recurring deposit account helps build a corpus by depositing cash on a monthly basis and receive an attractive corpus on maturity.
SEE ALSO: Recurring Deposit Accounts
Given below are the main characteristics of recurring deposits:
A flexi fixed deposit account helps enjoy the liquidity of a savings bank account as well as get high returns. As the name suggests it is a combination of a fixed deposit and a savings account, where the customers can get the benefit of earning higher interest than savings account as well as enjoy the liquidity of a savings account.
Given below are the features and benefits of Flexi fixed deposit accounts:
A certificate of deposit is a savings instrument that is similar to fixed deposit. Unlike fixed deposit, certificate of deposit cannot be withdrawn before maturity. These deposits have a fixed maturity date and a specified rate of interest. The certificate of deposit was introduced in the Indian market in the year 1989. Certificates of deposit are issued by scheduled commercial banks and some select financial institutions in India and are monitored by the RBI. The RBI issues guidelines for certificate of deposit from time to time.
Some of the advantages of investing in certificate of deposits are summarized below:
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