Money matters – that is the universal truth and the fact that money needs safety and security is everyone’s need. Bank Accounts are the financial accounts which make it easier for us, keeping the money management proper, the market flow going and our deposits safer.
Whenever someone wants to open a bank account, he/she might get confused with the different rigorous advertising of every bank being the best puts the customer into the dilemma of with which bank account they should go for. The best method to open a bank account is to understand the need for opening of that bank account. Once you are thorough with why you need it, then you can analyze the different types of accounts. When you are clear about the type of account you want to go for, you can simply check out the options each bank is providing and select the best available option. This process makes account opening easier and benefits the customer more than opening a bank account in hassle. For understanding the bank accounts properly, we need to know about the types of bank accounts that Indian Banks work with. Usually, there are four types of accounts that function, but with the passing time and increasing needs, the types of bank account also increased.
The major types of bank accounts are:
- Saving Account
- Regular Savings
- Current Account
- Recurring Deposit Account
- Fixed Deposit Account
- DEMAT Account
- NRI Account
- Retirement Account
- Loan Account
1. Savings Account :
The most popular account that an individual holds. Usually considered best for starting a financial relationship with banks, savings accounts are referred as the best options for the banking beginners. As the name suggests, Savings accounts are used for stashing away the extra deposits that one have.
The types of Savings Account are: –
(a) Basic Savings Bank Deposit Accounts:
The normal banking accounts are of this type. The usual bank account with no minimum balance and any number of deposits but just four withdrawals per month comes under this type. For the BSDBA accounts ATM Card, ATM cum Debit Card, Rupay Card are also provided free of cost.
(b) Basic Saving Bank Deposit Accounts Small scheme:
Bank accounts for small deposits that are usually used by lower classes and rural areas. For these bank accounts, the KYC process is more relaxed and the account can be opened just by providing a self-attested address proof and a photograph. There is a limit of cash withdrawals and deposits of about 10,000Rs per month. The limit of single usage withdrawing is about 50,000Rs.
2. Regular Savings Account:
The usual account owned by an individual to save his/her deposits. For some, these accounts even serve as salary accounts. These can be single accounts, joint accounts, association accounts, etc. as well. Even students can open zero balance accounts of these types. The bank also provides facilities like net banking.
3. Current Account:
Also known as Checking Account is usually preferred by individuals who carry out a higher number of transactions on a regular basis. One can have an unlimited number of payments with this account. Net banking facilities are available on these accounts. Usually, these are considered for bills and payments. Bank even charges a certain service charge for these kinds of accounts.
4. Recurring Deposit Account:
Recurring Deposit Account or RD Account are the bank accounts for people who want to deposit their savings in an account but not in the lump sum form. These kinds of accounts are generally used for long term goal investments.
For these accounts, the account holder has to pay a certain amount on a monthly basis, over which the bank also provides interest over a certain rate. Lack of payment in these monthly instalments becomes the cause of a small penalty. These can be single or joint accounts both and have a maturity period ranging from 6 months to 120 months. For this account, a passbook is provided to the account holder and the number of instalments once fixed, cannot be changed.
5. Fixed Deposit Account:
The Fixed Deposit or FD Account refers to a long term relationship an individual begins with a bank or financial institution. The “fixed” refers to the number of time for which the account holder wants to have deposition within the bank i.e., the maturity period.
Such accounts are used for depositing long term investments which the depositor continues to save money for the decided period of time. Although, the depositor can close or break the fixed deposit in between by paying a certain penalty.
There are two types of fixed deposit accounts-
a). Short Deposit Receipt
b). Fixed Deposit Receipt
6. DEMAT Account:
DEMAT Account is used by share-marketers and businessmen to proceed with the trading payments. The acronym DEMAT Account refers to Dematerialized Account and the shares and securities are held in electronic form. This account is used for converting the physical shares into electronic format and thus making the trading easier.
7. NRI Account:
The banking account which is opened by any Non-Resident Indian or someone with Indian Origin, which is authorized by the Reserve Bank of India, comes under this category. These types of accounts are helpful in facilities like currency denomination, transferability of amount and taxes.
8. Retirement Account:
With the help of Retirement Accounts or Individual Retirement Accounts (IRAs), you can individually and independently initiate savings for your future, ensuring a happy old age. As the name refers, retirement accounts are used for future plans and long term savings. The advantage of using retirement accounts is that these type of accounts provide tax advantages i.e., you may be excluded from paying income tax over the interest you earn, whether you put the money in or take it out. Although one should be careful with the tax proceedings and read out terms and condition carefully. Take the help of a financial advisor to understand the terms better and to ensure that you invest in the right place.
9. Loan Account:
A Loan account is an account that the bank opens for a particular loan product initiated. Like these other types of accounts, a loan account is not something which is opened by the customer. Banks are money lenders as well and provide money to the consumers for the acquisition of assets. Hence, if one requires a loan, he/she has to meet the bank’s requirements and if the bank approves the loan, they have to submit the necessary documents and the bank, itself, will open the loan account to record the loan proceedings. Usually, a single loan account is used for different loans. For example, one can use a single loan account for a 5-year housing loan and a 2-year educational loan. The bank uses this loan account to track all the transactions related to the loan viz repayment, interest, other applicable charges, etc.
An individual can open more than one type of any of these accounts as per one’s requirement. One should be clear about his/her needs and then can open a banking account depending upon it and checking the best bank facilities for it. For opening an account, one can just apply through the bank’s website or in person by filling the form in the bank.