A bank account is your safe place where you keep your money and savings. With the help of a bank account, you can save, manage and spend your money wisely. Based on various needs and requirements, banks in India offer different types of bank accounts. There are some accounts dedicated to saving money and some for business and investment purposes. If you are a student or a pensioner, there are options available for you too. In fact, banks also offer accounts specially designed for NRIs (Non-Resident Indians)!
So, which type of bank account should you go with? Here, in this brief guide, we will talk about different kinds of bank accounts and learn about their features to help you make the right choice.
Types of Bank Accounts in India
Savings Account
One of the most common types of bank accounts in India. It is a type of deposit account with which people save money and earn interest on their deposits. With a savings account in a bank, you can earn interest ranging from 2.50% to 7% per annum. It is perfect for salaried individuals, homemakers, students or anyone who is looking forward to saving money. A savings account is also preferred for allowing easy transactions online as well as offline. You can deposit and withdraw money anytime. Though some bank accounts need to have a minimum balance, several banks offer zero-balance savings accounts. Also, savings accounts offer ATM, mobile banking and internet banking.
Current Account
This account is usually for businesses and professionals who need regular transactions. They prefer a current account as it offers unlimited transactions and has no limits on deposits or withdrawals. Also, it offers an overdraft facility and hence, users can withdraw more than what is in the account. However, a current account may not provide you with any interest on your deposits. Also, there may be a high minimum balance as banks may require a sum of ₹10,000 or more to be maintained in the account. If you are a company, then you must open a current account.
Fixed Deposit (FD) Account
If you are looking forward to saving money for a fixed time and earning a higher interest rate, then opening a Fixed Deposit account is perfect for you. An FD account offers higher interest rates than a normal savings account and is usually between 5% and 8% per annum. However, you would need to deposit your money for a fixed tenure, which could be anywhere between 7 days and 10 years. It offers safe investment and is a secure way to grow your money. Keep in mind that you would need to pay a minimal charge on early withdrawals of your deposits.
Recurring Deposit (RD) Account
A recurring deposit (RD) account is for saving small amounts every month. Here, you deposit a set amount every month and earn a fixed interest on it. Though the interest earned is similar to FD, you earn it monthly with a recurring deposit account. An RD account also offers flexible duration, ranging from 6 months to 10 years. So, if you are looking for an option for your disciplined savings, then go with a recurring deposit account. With this, you would be able to save money on a regular basis.
Salary Account
A salary account is a type of savings account that is provided by employers to employees. It is often a zero-balance account where you do not need to maintain any monthly minimum balance. This is the account where your salary is auto-credited. With a salary account, you may also avail free debit cards and online banking services. You can also change it into a regular savings account if your salary is not credited for a few months.
NRI Accounts
As the name suggests, NRI accounts are for non-resident Indians or Indians living abroad. There are mainly three types of NRI accounts:
a) NRE (Non-Resident External) Account
- Deposits in foreign currency and converted to Indian Rupees.
- Interest is tax-free in India.
b) NRO (Non-Resident Ordinary) Account
- Used for managing income earned in India.
- Withdrawals are allowed in Indian Rupees only.
- Interest is taxable in India.
c) FCNR (Foreign Currency Non-Resident) Account
- Deposits remain in foreign currency.
- No currency exchange risk.
- Interest is tax-free in India.
Demat Account
You would need to open a demat account if you want to buy and hold shares, stocks and mutual funds. With a demat account, you would be able to hold stocks digitally and there is no need for paper share certificates. It also facilitates easy buying and selling of stocks in the market.
Conclusion
So, these are different types of bank account options you can go with in India as per your needs and requirements. Make sure you are aware of these so you can choose the right type of deposit account for you.
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