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What are the Different Types of Bank Deposits in India?

What Are Deposits?

What are the Different Types of Bank Deposits?

1. Current Deposit Account

Businessmen generally maintain these types of accounts as they carry out large-value transactions daily. The main difference from a savings account is that current accounts do not bear any interest.

Pros

Cons

Easily manageable funds

Earns no interest

Build business reputation

Some employ transaction fees

Systemic handling of receipts

A high amount of minimum balance has to be maintained

Limitless withdrawals

Bank services are pretty expensive

Overdraft facilities are easily accessible

Time-consuming paperwork

Tracks your growth in business

2. Fixed Deposit Account

A fixed deposit account holds a large amount of money for a predetermined tenure wherein the financial institution pays a certain amount of interest on the deposited amount.

Pros

Cons

Frequent Interest Payouts

Penalty if the money is withdrawn prematurely

It is tax-saving

It is taxable

Covered under deposit insurance

Fixed interest rate

Benefits for older people

Has no effect on inflation risk

Works as a guarantee against a loan

3. Savings Account

A savings account is basically such type of account where the financial institution pays a moderate amount of interest based on the amount deposited. They are generally useful for short-term needs.

Pros

Cons

Receive interest

Fluctuating interest rates

The safest option for investment

Easily accessible: More prone to spend

Requires the least amount for investment

Penalty if minimum balance is not maintained

4. Recurring Deposit Account

In this type of account, the depositor deposits a fixed amount of money in the account every month for a predetermined tenure. This tenure generally varies from one to five years. 

The principal amount of money is returned back to the depositor once the tenure is completed, and here, the interest is estimated every quarter.

Pros

Cons

Used for short-term goals

Highly liquid cash

Accessible Online features

Lower rate of interest

Interest rates depend on tenure and the amount

Firm monthly instalments

Investment can be done easily

No strict rules for deposition and withdrawal

Having a clear concept of the various types of bank deposits is a very important aspect of managing your finances. With the help of these, you will know where to keep your money and how to grow your savings.

FAQs about Different Types of Bank Deposits