To effectively manage your finances, you must have a bank account. A bank account brings you a wide range of resources and services that can assist you in managing your money. It makes no difference if you are a student, working person, company owner, or homemaker. Everybody can open a bank account based on their eligibility and preference. We shall look at six major types of bank accounts in this article.
Different types of bank accounts
Saving
- It’s a straightforward account type that lets you preserve your savings, as the name would imply. Where ever and whenever we can, we all love to save money. Be it receiving discounts from stores or setting away a portion of our salary for a bigger goal. You can manage and track your money more easily with the use of a savings account.
- There is no associated upper limit. This means you can deposit as much money as you wish. Although there is a lower limit. The minimum balance is the term for this cap. At any given time your saving account must not go below that amount. The lower limit depends on the type of saving account and the bank. Everyone is eligible to open a saving account. There are various types of saving accounts offered to serve children, students, adults, and senior citizens.
Current
- Consider managing a company. You have a lot of transactions to handle as a business owner during the month. From paying employees’ salaries to paying taxes, suppliers, utilities, and other expenditures. The bank offers current accounts to make this process simple. It is dedicated to assisting business owners, independent contractors, and traders. Compared to savings, this account permits a much higher volume of transactions each day.
- Unlike a savings account, you don’t earn any interest on the money which you have maintained in your account. You are nonetheless required to have a minimum balance. One unique feature of this is, it provides an Overdraft facility. This means it will allow you to withdraw more money than what you have.
Salary account
- If you are an employee at a corporation, you would want your salary to be credited every month on a fixed date into your account. From the perspective of the corporation, it is less straightforward. There may be thousands of employees at work. Each person has a favored bank and a preferred branch. Keeping track of and managing that many accounts for the organization would be a nightmare. The procedure of transferring salary would be slowed significantly.
- To resolve this issue corporation requests the bank to open a salary account for their employees. This makes managing and tracking salary and expenses for a company much easier. The maximum amount that may be placed is once again unrestricted. There is no minimum balance requirement for this account type, which makes it special. It implies that you can deposit the complete amount into your account as soon as your income is credited.
- These accounts have the option to be changed at any moment into savings. The banks have the power to convert if there has been no activity for more than three months.
NRI
- NRI stands for Non-resident Indian. To be qualified as a NRI a person must be born in India. The person must hold an Indian passport and must be residing abroad for a certain amount of time. This account helps the NRI to deposit their money in foreign currency which automatically gets converted into INR.
- There are several accounts in this category under NRI. NRO is one of the fundamental NRI accounts. The main benefit is that the currency rate has no bearing on it. A person can use NRO to create a savings or FD account.
- An NRI must open an NRE if they also want to create a current account. An FCNR, or foreign currency non-resident account, is required if you want to hold the currencies that you earn in an Indian account.
Fixed Deposit
- In this, you simply deposit a lump sum amount for a fixed period. You get a much higher rate of return as compared to a regular saving. But during this period you cannot withdraw this sum. Although if you still wish to, you can proceed you might lose a portion of interest you could have earned. This is the best option if you want to save aside money for the future and are determined to keep it there until you need it.
Recurring Deposit
- This is for the people who are willing to dedicate and save a fixed portion of money every month. In this, your bank will automatically keep aside the decided amount on which you will earn higher interest. It is similar to an FD. The only difference is that in FD you deposit once while in RD you deposit monthly.
Conclusion
In conclusion, being aware of the many bank account options will enable you to select the one that best satisfies your requirements and financial objectives. Remember that opening a bank account is an essential first step towards good money management, so make an informed decision and make use of all the tools and services at your disposal.