Current, saving and recurring. These are the three most common words you hear when you think of opening a bank account. May be you already have a bank account that your grandparents opened for you in your childhood. Or, the company you joined through college placements opened your first bank account with a bank of their choice.
What if, you now want to open a separate bank account for your other needs? Like setting up an account that will solely handle your investments, or credit card bills, or a recurring deposit! Too many choices, right?
Let us take a look at the different types of bank accounts currently on offer by all major banks in India and how you can benefit from their unique features.
A current account is a kind of bank account that has no limit to the number of times money can be deposited or withdrawn from the account. This type of account is generally used for everyday spending and by professionals and organisations for business transactions.
Overdraft, net banking facilities along many other services are rendered with this account. Banks do not pay interest on current accounts, however, a service charge is applicable if a minimum account balance is not maintained.
As the name suggests, a savings account is intended for saving purposes. Account-holders are given interest on their deposit. There is no limit to the number of times for depositing money in the account but KYC needs to be completed using PAN to withdraw a sum of more than ₹50,000. There is a minimum balance that has to be maintained to keep this account but students can open a zero balance account by submitting required documentation.
Loan facility is not available against the savings account, unlike the current account.
Recurring deposit account
A recurring account is made by keeping a future financial goal in mind which can be saving for a wedding, house, or maybe just saving up till a fixed amount is saved. The account holder deposits a fixed amount every month until a fixed number of instalments have been deposited. The payable sum, which can be as low as ₹10, and the instalments are fixed in advance and cannot be altered later. The rate of interest offered by banks on this type of account is generally high.
An account can be opened for any period ranging from 6 months to 10 years. Withdrawals before the maturity period are not allowed but still, a loan can be taken against this account.
A fixed deposit account is similar to a recurring deposit account but instead of being deposited in instalments, a lump-sum amount is deposited for a fixed period of time bearing a high rate of interest. A fixed deposit can be opened prematurely but a penalty is levied by the bank in such a case.
Non-Resident Indians (NRIs) also have the choice to open a bank account in India from various options, which are: NRO ( Non-Resident Ordinary Rupees) Account, NRE ( Non-Resident External Rupees) Account, and FCNR ( Foreign Currency Non-Resident ) Account.
Having a bank account is vital for individuals to manage their funds securely. There are numerous options available in the country offered by different banks. One can choose to open any type of bank account based on one’s needs.