BY IMBESAT SHAIKH FYBMS ROLL NO 15

There are a variety of bank accounts available and some terminology to get used to. This section explains the most common areas of banks and building societies.

Banks have two basic types of accounts: current accounts savings accounts. Each bank may have its own names for types of accounts within these categories but the basic principles remain the same.

The other two widely used bank accounts are Fixed account Recurring account These two accounts are mainly like an investment which gives you the interest on your amount after the prescribed period

Current accounts are used for day-to-day transactions with money coming in, such as wages, and money going out, such as cash withdrawals, bill payments, cheques etc.

Most current accounts offer: a cheque book a debit card a cashpoint card statements standing orders (SO) direct debits (DD) interest overdraft loans.

Savings accounts, also known as deposit accounts, are intended for money to be paid in but not often withdrawn. Some allow instant access to your money but others require that you give the bank notice before making a withdrawal or incur a penalty. They don t offer the same access facilities as current accounts such as cheque books and cashpoint cards. They usually offer higher rates of interest than current accounts but these too can vary so it is worth shopping around.

Individual savings accounts or ISAs are a government scheme to encourage more people to save or invest their money without paying any tax on the interest earned. With an ordinary bank or building society account you pay tax on the interest you earn. There is a limit to how much you can invest in an ISA each year.

A Fixed Deposit involves locking a particular amount of money for a certain time period, say Rs 20000 for 1 year, at a much higher rate of interest than being given on amount in a savings account. Since interest accrued on a FD is much much higher than that on a savings account, its wise to keep money parked in these instruments.

However one must be sure to balance their needs well so that they do not have to break an FD before maturity to meet their daily requirements. It means that if a FD is broken before its maturity, a penalty is applied, and hence the returns come out to be much lower comparatively. So make sure your needs are well taken care of, before you park the money in fixed deposits.

The main objective of recurring deposit account is to develop regular savings habit among the public. In India, minimum amount that can be deposited is Rs.10 at regular intervals. The period of deposit is minimum six months and maximum ten years The rate of interest is higher.

Recurring deposit encourages regular savings habit among the people. Recurring deposit account holder can get a loan facility. The bank can utilise such funds for lending to businessmen. The bank may also invest such funds in profitable areas.

When choosing a bank account, you may find it useful to consider: how much interest is paid when your account is in credit. how much is the interest free overdraft limit. charges for agreed overdrafts and loans these vary. charges for unauthorised overdrafts. These are overdrafts where you have not received permission from your bank in advance and the charges are much higher. the qualifying period after graduation (to stay in the same account, which will probably have better rates than other accounts).

the location of cashpoints and branches telephone banking service online banking service can you use other bank s cashpoints, do they charge? Saturday or late night opening where can you make cash and cheque deposits personal banking advisers standing orders and direct debits

If at any time you notice an item on your statement which seems incorrect you should tell your bank, building society or credit company immediately. It could be an error or it could be an incidence of fraud if someone has used your card details. Be vigilant and report anything unusual.