I have explained the meaning of Saving Account as well as Current account and its silent features.
The main differences between these two accounts is outlined below in terms of their respective objectives and merits of each other accounts.
a) Saving Account:
The real meaning of this can be seen on the account mentioned. It is called saving of hard-earned money by an individual with a intention to save part of his income for future purpose and also to earn some interest on the deposited amount.
It is opened in bank by salaried person for have fixed income on a monthly basis. This account can be opened either by a student, senior or a retired person or a pensioner.
The purpose of opening this account is to save money and collect their savings. The minimum amount to open an saving account varies from bank to bank. Example : Rs 500 to Rs 5,000.
Main objectives of Saving account:
a) No maximum period for maintaining saving account. Saving account are continues in nature;
b) The holder of this account enjoys full rights to withdraw funds as and when he requires them, during the official working timings of the bank.
c) Interest shall be given to the account holder on the saving balance at end of month and the rates varies from bank to bank, which is approx to 4% to 6%.
d) The holder of account can withdraw the money through withdrawal slip provided by the bank in the counter itself.
e) Withdrawals are limited in a month as per guideline by each banks.
f) To operate this account, NIL balance is not acceptable by the bank, hence at least a minimum of Rs 500 and above is recommended to keep the account active.
Main Merits of maintaining Saving account:
a) The debit card issued by the bank to the account holder of saving account helps to do online shopping very easily
b) Bank provide statement during each month, and this helps the salaried personnel to keep a track on each items he spent and earned. It means he get a thorough report of all debits and credits earned / spent during the month.
c)It provides immediate assistance to cash, as it provide ATM card to the account holder.
It is an account opened for business transactions. In this type of account, frequent transactions are made on a day to day business hours.
Current account are those accounts operated and opened by businessmen, multi-national companies, firms, who will maintain bulk transactions with the banks on a daily basis consisting of both deposits and withdrawals.
The purpose of opening this account is that frequent business activities can be done regarding deposit and withdrawals at any time without any written advice to the bank. These accounts are very useful to make payments to suppliers by using cheques.
Furthermore, money received from the esteemed customer can be onward deposited into this account on a daily basis.
The minimum amount to open an current account varies from bank to bank. Example : Rs 5,000 to Rs 10,000.
In this current account, bank charges a minimum amount of Rs 50 on each transactions, for service rendered to customers and usually no interest is paid on current account.
Current account holder get benefits of overdraft service provided by the bank.
Main objectives of Current account:
a)No fixed period for maintaining current account. It is continues in nature;
b)No Interest paid on current account. But as per prevailing market conditions, many major banks do pay interest also on current account.
c) Deposits and Withdrawals can be made without any limit specified by the banks.
d) To operate this account, NIL balance is not acceptable by the bank, hence at least a minimum of Rs 5,000 and above is recommended to keep the account active.
Main Merits of maintaining Current account:
a)This account primary focuses on ensuring businessmen, firms and companies to run their business dealings smoothly.
b)Overdraft Services provided by the bank to current account holder.
c)Direct payment can be done to supplier with help of cheque book provided by banks.
d)By opening Current account, it helps others to know the business credibility of your firm, organisation.
e)By opening current account many businessmen, firms, and companies will be secured of maintaining their huge accounts in a safe location.
Difference between Fixed Deposits account and Recurring Deposit Accounts:
Fixed Deposits Account:
This type of account can be opened by an individual, corporate companies, firms, businessmen, multinational companies.
Under this type of account, funds are deposited for a short, medium and long term i.e six months, one year, or five to ten years. The rate of fixed deposits rates varies from bank to bank, which is approx to 9% to 9.5%. The fixed deposit account holder has rights to opt for interest on monthly, quarterly, half yearly, or yearly basis.
The Fixed Deposit Account Holder earn more interest if he surrender or keep the FD in bank for a period of more than one to five years, meaning longer the term, greater the interest earned.
Under this account, the money deposited cannot be withdrawn before the expiry of the fixed term of period / maturity period which is specified on the fixed deposit receipt.
In case of emergency, bank allows to pre-settle the fixed deposit account prior to maturity date by deducting 1% from the interest payable as on that date.
Main objectives of Fixed Deposit Account:
a) Higher rate of interest can be earned by an individual, corporate companies, firms, businessmen, multinational companies on their surplus money.
b) Term of deposit varies from 6 months to 10 years.
c) A fixed deposit can be renewed further for a period of 6 months to one year, five or ten years.
Main Merits of Fixed Deposit Account:
a) On a Fixed Deposit account, the holder enjoys the saving made with high rate of interest paid by bank during the maturity
b) The depositor can also apply for loan facility surrendering the fixed deposit amount which is already in bank.
Recurring Deposit Account:
The real meaning of this can be seen on the account mentioned. It is an account where some amount of saving of hard-earned money is deposited in the bank on a daily basis. These savings are made for a specify purpose at a future date.
Examples: Wedding cost, purchase of land, car, house-hold things etc.
These deposits are opened by regular income individual who want to save on a timely basis for a certain period of time and earn a higher interest for the fund deposited in the bank. A certain fixed amount is deposited every month for a period and total amount is paid to the depositor along with the interest.
The rate of interest is slightly higher than the savings account. These recurring deposits has a fixed maturity period which is similar to FD account.
In this deposit account, the individual need to be sure of paying the fixed amount every month to the bank. Bank will never allow any partial payment or more amount in this account.
Main objectives of Recurring Deposit Account:
a) The main object of recurring deposit is to improve savings amongst the individual.
b) Minimum amount that can be deposited is Rs 20 at a timely intervals.
c)The rate of interest is slightly higher than savings account
d) Term of deposit is minimum from 6 months to maximum 10 years.
Main Merits of Recurring Deposit Account:
a) Loan facility can be provided by the bank upto certain percentage of the amount of the account holder.