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A range of bank accounts are available for an investor to choose from depending on different factors such as purpose of the account, location of account holder and the frequency of transaction etc. A bank account holder receives varied features and deals offered by the bank as per his/her needs.
If you consider the conventional types of bank accounts, there are four basic types to choose from, namely:
Each of these accounts are unique and have their own advantages. Let’s understand them better.
As the name goes, a savings bank account is a regular deposit account that offers a certain minimum interest rate to the account holder. A savings account suits people with specific income who want to save their money in an account.
It is very simple to open a savings account. All you need is to deposit a small amount, which is regarded as an initial deposit fixed by the particular bank as per their rules and regulations. Money in a savings bank account can be deposited at any time by the depositor. These banks offer ATM cards that can be used by account holders to withdraw money from the account anytime. Besides, the investor can also use cheque or withdrawal form to withdraw money from the account. However, there are certain restrictions in terms of withdrawal and transaction to be done in a savings account. Here, the bank levies a cap on the number of transactions allowed to the customer every month.
Depending on their requirement, age, purpose etc., a savings bank depositor can avail from a number of savings accounts offered by the banks. For instance, you can have a regular savings bank account, senior citizens savings bank accounts, savings accounts for a child and savings accounts for women etc. Further, there are joint accounts or family savings accounts etc.
A current account is another type of bank account that can be opened by a depositor. Here, there are fewer restrictions levied by the bank as compared to savings accounts in terms of transactions.
A current account, also known as demand deposit account, is mostly used by traders and businesses who have frequent needs of cash transactions on a daily basis. These accounts levy no limitation on the number of per day transactions done by the depositor. Also, you can hold more liquid deposits or cash in a current account as compared to a savings account.
Another advantage of current accounts is that they allow overdraft facility, which means the depositor can withdraw more money than what is currently available in his/her account. This is a unique facility that differentiate a current account from a savings account. Another key difference between savings and current accounts in India is that the current account does not offer any interest rate and hence they are regarded as zero-interest bearing accounts.
Further, as in the case of a savings account, a depositor has to maintain a minimum balance in the current account as well. Current accounts are mostly opted by people involved in trade and commerce to smoothen their daily performance of multiple transactions. You may note that banks charge hefty amounts as maintenance and service charges to maintain these accounts.
A Recurring Deposit (RD) comes with a fixed tenure and allows the depositor to invest an amount of money in it regularly (either monthly or quarterly) to earn interest. It is not necessary for the deposit or investment to be a lump sum amount. Rather, the account holder can deposit a certain amount in frequent intervals.
The tenure of the RD remains fixed and cannot be varied. Most RDs reach maturity in 6 months to 10 years time. However, if the depositor withdraws the money prematurely, he/she can face a penalty in the form of low interest.
An RD is the best option for people who want to integrate the habit of savings in their lives. The rate of interest of RD might vary depending on the bank you are opening the account in. It can be between the range of 5-7 % for citizens below 60 years. For senior citizens, the rate might differ.
Read More: How to Pay Post Office Recurring Deposit (RD) Amount Online?
Fixed Deposits (FDs) is a type of bank account in India that allows the investors to increase funds by depositing them in a FD account and by earning a good interest rate on it. Here, the investor can keep a fixed sum of money in the bank for a certain time period till the FD matures. The term of FDs can range between seven days to 10 years, and depending on the FD tenure its interest rate also varies.
FDs generally do not allow the investor to withdraw money before maturity. Even if they allow, they levy a penalty to the customer in the form of low interest rates. FDs are guaranteed return plans with an interest rate of 5 to 9%, which is higher as compared to savings accounts. Further, FDs also provide tax exemption of up to INR 1, 50,000 under section 80C of the Income Tax Act, 1961.
Like in the case of recurring accounts, FDs also don’t allow premature withdrawal of money. Though a customer can shut-down his/her FD account ahead of time, they need to pay a penalty for the same. Overall, FD is a safe investment portfolio allowing guaranteed returns.
Also Know: TDS on Fixed Deposits (FD): A Detailed Guide for TDS on FD Interest, India
When considering types of bank deposits, every account has its advantages and disadvantages and it is up to the account holder to consider which account type would suit them. With advancement in banking technology and digital payments, banks these days are offering hassle-free services to customers. An investor can open any of the above mentioned accounts offering varied facilities. You are no more required to visit your branch to understand the details of transactions made or to check account balance. Everything can be done smoothly from the comfort of your home.
Browse PayBima Blogs to read interesting posts related to Health Insurance, Car Insurance, Bike Insurance, Term Life Insurance, and Investment section. You can visit PayBima to Buy Insurance Online.
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There are mainly four types of bank deposit accounts in India, namely -
1. Current Account,
2. Recurring Deposit account,
3. Savings Accounts, and
4. Fixed Deposit Accounts.
Bank deposits are of two types - demand deposit and time deposit. Under a demand deposit, which is for a conventional savings account, the depositor can withdraw money at any time. On the other hand, Time deposits come with fixed tenure and pay a fixed rate of interest which you cannot withdraw at any time. For Example, Certificate of Deposit (CD).
The different types of accounts include:
# Current Account
# Savings Account
# Fixed Deposit Account and
# Recurring Deposit Account
Deposit accounts are also termed as bank accounts. They are financial products offered by banks and credit unions for your banking needs. Deposit accounts can be any account type such as a savings account or a current account where a customer can deposit and withdraw money at any time.
Fixed Deposits (FDs) are kind of term deposit accounts which allow the investor to earn interest by depositing an amount for a certain period of time. Different types of fixed deposit accounts are offered by almost all the major banks in India.
The post Different types of bank deposits and accounts in India appeared first on Paybima Blogs.
The government of India comes out with various welfare schemes aimed at the elderly citizens in the country from time to time. These schemes are designed to encourage senior citizens to save and invest for the future so as to make it secure for themselves and their loved ones. One such scheme designed for the elderly 60 years old and above is the Senior Citizen Savings Scheme or SCSS for short. The biggest advantage of the scheme is that it only requires opening an account at the nearest bank or post office, thereby saving senior citizens from unnecessary hassle. Besides, the post office interest rate on the scheme is also quite attractive.
Also Read: SBI Senior Citizen Savings Scheme
As stated above, the benefits under the Senior Citizen Saving Scheme can be availed as simply as by opening an account at a post office near you or at the nearest branch of your preferred bank. The whole idea behind the scheme is to help senior citizens earn a regular and stable income after 60 years of age (post-retirement).
Here are some of the major benefits offered by SCSS for senior citizens:
Here is some more information that you need to know while opening an SCSS account:
Also Know: SBI SCSS Interest Rate, Benefits & Eligibility
Now that we know that the SCSS comes with a host of benefits, we’re sure you might already be considering investment in the scheme. So let us look at the exact process for opening a bank or post office account under SCSS.
As mentioned above, in order to avail the benefits highlighted in the earlier section, you would need to open an SCSS account at either a bank or a post office near you.
Step 1: Go to a bank or post office branch near you
Step 2: Take the application form from the bank/post office, duly fill it out with the required details and submit it. You would also be required to submit your KYC documents along with the application form (more on documents required for opening an SCSS account in the later section)
Step 3: Now submit the cheque for the amount that you wish to deposit in your bank account
Step 4: You can also choose to add nominees to your SCSS account, to transfer the benefits of the scheme to your loved ones in your absence
For opening the SCSS account at a post office or bank branch, you would need to submit the following documents along with the application form mentioned in the above section:
Note: All the documents mentioned above must be self-attested by the applicant before submission.
The current rate of interest on the SCSS stands at 7.4% per annum. This means that the returns on investment are relatively higher than other savings and FD accounts.
As for the quarter ending March 31, 2022, the new interest rate on post office schemes has been defined as 7.4%. The quarterly interests on this scheme are payable on 31 March, 30 June, 30 September, and 31 December each year.
Here are the interest rates paid on the SCSS in the recent past for your better understanding:
Time Period for Which Interest Paid | Rate of Interest Per Annum |
April to June (Q1 for FY 2021-22) | 7.40% |
July to Sep (Q2 for FY 2021-22) | 7.40% |
Oct to Dec (Q3 for FY 2021-22) | 7.40% |
Jan to Mar (Q4 for FY 2021-22) | 7.40% |
April to June (Q1 for FY 2022-23) | 7.40% |
July to Sep (Q2 for FY 2022-23) | 7.40% |
A quick look at the table above indicates that the rate of interest on SCSS has been maintained at 7.4% p.a. for every quarter since the FY 2021-22, continuing through the FY 2022-23.
The Senior Citizens Savings Scheme is an initiative by the government to ensure financial security to the senior citizens by way of assuring a stable and regular monthly income post retirement. For more details on such senior citizens saving schemes and investment options for the elderly, visit PayBima.
Browse PayBima Blogs to read interesting posts related to Health Insurance, Car Insurance, Bike Insurance, Term Life Insurance, and Investment section. You can visit PayBima to Buy Insurance Online.
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Only senior citizens aged 60 years and above are eligible for opening an SCSS account.
The applicant can only make one single deposit under their name.
Yes, if the applicant has been drawing a retirement pension or family pension from the Government of India, he/she is mandated to submit a life certificate for opening the SCSS account.
The interest earned under the SCSS is liable for tax payment under the specific tax slab that the beneficiary may fall under.
In the unfortunate event of the death of the depositor before the scheme matures, the account is closed down and the deposit is refunded along with the interest earned to the nominee or legal heir appointed by the depositor.
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