Types of Bank Accounts
Though, the kinds of accounts offered can vary from bank to bank, here are a few of the common bank accounts offered by commercial banking institutions.
Checking Account
A checking account is also known like a current account or a transactional account. Money deposited in this kind of account can be withdrawn at any time, as there in no restriction on the number of withdrawals and how much money withdrawn. Customers are generally given paper checks to execute day-to-day transactions, like paying bills, making purchases, or transferring money to a different account. ATM (Automated Teller Machine) facility is also provided towards the customers. However, no interest is paid on the transferred money and sometimes, customers have to pay a charge towards the banks for rendering this service. This type of account is usually maintained by businessmen or concerns, as they have to create a number of financial transactions each day. A transactional account may also be called a demand deposit account, as no notice is needed to withdraw money, i. e. money is available on need.
Savings Account
Savings accounts are aimed towards mobilizing small savings from everyone. There are certain restrictions regarding the number of withdrawals and also the amount to be withdrawn in a particular time time period. However, money deposited in this account, earns a fair interest rate. Though the customers can't withdraw their money with inspections, they can avail the ATM facility for the exact same. A passbook is also provided, which keeps track of all of the financial transactions.
Money Market Account
A money market account is a kind of deposit account, in which money can be deposited to earn a higher interest rate than the savings account. However, a minimum balance is needed to be maintained to earn interest and avoid fees. There's also a limit on the number of transactions that can be completed in a particular month. The customers are usually permitted to make 6 withdrawals per month.
Certificate of Deposit
A certificate of deposit is also called time deposit or fixed deposit account. This type of bank account requires the customers to deposit a certain amount of cash for a fixed time period. The money deposited with this account can't be withdrawn before the date of maturation. However, some banks allow customers to withdraw money prior to maturity, by charging a penalty. The rate of interest paid promptly deposits is usually higher than the other types associated with bank accounts. In addition to this, the interest paid about this account depends on the maturity period, i. e. lengthier the maturity period, the higher is the rate associated with interest paid.
Banking institutions offer several different types of bank accounts to fulfill the individual needs of their customers. These bank accounts enable the general public to deposit their money in banks and thereby generate a monetary return.