In-Depth Look at 6 Different Types of Bank Accounts

Everyone, whether a student, a homemaker, a businessperson, or a professional, should have a bank account in this digital age. It’s unimaginable not having a bank account. There are several different types of accounts to pick from. Here are some lists of bank accounts,

• Current Account
• Savings Account
• Salary Account
• Fixed Deposit Account
• NRI Account
• Recurring Deposit Account

Current Account
Current Accounts are for people who do lots of transactions. Businessmen and entrepreneurs, who need to make and receive payments more often use the current accounts. The current account allows overdraft facilities also. The required minimum balance in a current account is high compared to a savings account. We don’t get any interest for the amount deposited. There is no limit to how much amount we can deposit in the current account. If we didn’t maintain the minimum balance in the current account bank can take a fine from us. 

Saving account

Savings accounts are used to save money. Everyone can open a savings account. A savings account gives us interest for the amount we deposited. The savings account interest rate is comparatively low but we don’t have any restrictions, we can make withdrawals at any time we want. Now in India some banks provide zero balance accounts so we don’t need to worry about minimum balance. Compared to the current account the required minimum balance is less in a savings account. Unlike a current account, there is a monthly transaction limit if we exceed the limit the bank will take a fine us. 

Salary Account

Your salary account is one of the various types of bank accounts that you have opened as a result of a partnership between your employer and the bank. This is the account to which all employees’ salaries are credited at the start of the pay cycle. Employees can select the sort of salary account that best suits their needs. Your pay account at the bank also has a reimbursement account, which is where your allowances and reimbursements are credited. A salary account has no limit on the amount of money that can be deposited. A salary account is a zero balance account so we don’t need to worry about the minimum balance.

Fixed Deposit Account

A fixed deposit account allows you to earn interest for the amount you deposit. The amount we deposited is kept locked for certain periods like 7days to 10 years. Normally we cant withdraw the money until the tenure is completed. Some banks allow pre withdrawal but the interest rate we get is reduced. There is no limit to how much money we can deposit. The interest is paid once the tenure is complete. Fixed deposits are risk-free investments with a decent interest rate. The interest we get from a fixed deposit account is higher than the savings account. The interest rate depends on the tenure we choose if we choose 7 day or one-month tenure the interest will be low but if we choose one year or two years the interest rate will be high.

NRI Account

An NRI account is an account that is opened by non-resident Indians. Almost all major banks in India offer an NRI Account. These accounts offer a variety of features, such as currency denomination, amount transferability, taxation, and so on. NRI accounts are divided into three categories.

• Non-Resident External Account(NRE)
• Non-Resident Ordinary Account(NRO)
• Foreign Currency Non-Resident Account(FCNR)

Non-Resident External Account

You can effortlessly move your international earnings to India using a Non-Resident External (NRE) Account. This sort of account, on the other hand, is controlled by the rupee and can be opened as Current, Savings, Fixed, or Recurring Deposits.

Non-Resident Ordinary Account

The Non-Resident Ordinary (NRO) Account is used to deposit rupees earned in India. This account can also be used to deposit foreign earnings. When an Indian person goes abroad for work to stay, the bank should convert his resident account into an NRO account. As a result, it is critical to notify the bank of the individual’s departure from the country.

Foreign Currency Non-Resident Account

   The Foreign Currency Non-Resident (FCNR) Account can be opened in a variety of currencies, including US dollars, Canadian dollars, Australian dollars, pounds, Euros, and yen, among others. These FCNR Accounts are available as term deposits with the following maturity periods:

1. 1 year and above(less than 2 years)
2. 2 years and above(less than 3 years)
3. 3 years and above(less than 4 years)
4. 4 years and above(less than 5 years)
5. 5 years

Recurring Deposit Accounts

The term of a recurrent deposit (RD) is fixed. To earn interest, you must invest a set amount of money in it regularly once a month or once a quarter. Unlike FDs, where a lump sum deposit is required, the amount required here is less and more frequent. The RD’s term and the amount to be invested each month or quarter cannot be changed. Even with RDs, premature withdrawal carries a penalty in the form of a lower interest rate. An RD’s maturity span could be anywhere from six months to ten years.