Let us understand the basics first. What exactly is a bank deposit?
A bank deposit is made when cash is placed into any banking establishment for custody. These deposits are made to place accounts such as savings accounts, checking accounts and money market accounts. The account holder has the right to withdraw deposited the deposited cash, as set forth in the terms and conditions according to the account agreement.
There are several types of deposit accounts. Let us take a look at a few in detail.
- Current deposit account:
- Also known as a demand account, this account type is a necessary checking account and is rarely used for investment or saving purposes.
- Liquid deposits are very common and there is no limit on the number of transactions in a day or the amount either.
- Money can be withdrawn using bank cards, over-the-counter withdrawal slips or checks.
- Usually, banks do not have any interest in such types of accounts, but in recent times, these rules are changing and the banks charge an amount suitable to their needs.
- Savings account:
- Savings accounts recommend the account holder interest on his or her deposits. On the other hand, in certain cases, account holders may acquire a monthly cost if they do not uphold a set balance or a certain number of deposits.
- A large majority of the banks have policies for the highest number of withdrawals in a period and the maximum amount of withdrawal but rarely do any banks put into effect such rules and regulations. But in certain cases, the bank has every right to impose constraints if this type of account is being mistreated as a current account.
- Recurring deposit account:
- Popularly known as RD accounts, and are most suitable for those account holders who do not possess a lump sum amount in savings.
- Interest is almost always charged on the amount already deposited via monthly installments.
- With this type of account, the account holder must deposit a fixed amount monthly (which can be as little as 100INR per month). If this is disrupted, a penalty fee will be extracted.
- A pass book is typically issued in which the person can get the entries for all the deposits made by him or her as well as the interest earned.
- Fixed deposit account:
- Popularly known as FD accounts, every bank in India offers this scheme with a wide array of tenures for periods ranging from 7 days to 10 years.
- This type of account is inclined to propose a higher rate of return than the traditional savings accounts, but the money has to stay in the account for a set period of time.
- Call deposit account:
- Most banks refer to such an account as an interest-bearing checking account, Checking Plus or Advantage Accounts.
- These accounts merge the characteristics of both the checking and savings accounts, permitting account holders to easily access their money but also earn interest on their deposits.
So now that you know about all kinds of deposits, what are you waiting for?
Go save! Get rich!