The “Bank Account” is an accounting record opened by a person with a banking institution to join its client base. This relationship is established through a contract to be agreed upon between both parties. In some banks, this contract is called Account Opening Agreement. Regardless of its name, the agreement establishes the rights and obligations for the respective parties in accordance with applicable regulations, customs and procedures. Those grounds are specifically referenced and mutually agreed upon in the agreement framework.
Individuals and corporations opt to open bank accounts for many reasons, including that they feel safe to deposit their money with banks. This minimizes the odds of theft or losing their money. Furthermore, it saves their time and effort as their bank provides them with the ability to use e-banking services and electronic channels to pay bills or transfer money with no trouble.
Additionally, the funds held with banks can be better managed as the client’s monthly expenses are monitored through the account statement. It also facilitates the financial transactions since it allows paying or receiving money using the checkbook or bank transfers, as well as receiving the salary. Some businesses prefer to pay employees their salary by direct bank transfer rather than cash.
There is a wide variety of bank accounts’ types to choose from, which differ from one bank to another, depending on the bank you select and the benefits associated with each account. In general, the core types of bank accounts fall into three categories: current account, savings account and time deposit account.
A Current Account is the one that allows you to conduct traditional banking transactions, such as cash deposits or withdrawals, check writing, making payments or collect funds, as well as paying your recurring bills through the internet or telephone banking. You can also open a joint account in a partnership with another person. No minimum deposit is required to open a current account, but the client must be at least 18 years old. Yet, this type of accounts doesn’t pay interest on the deposited funds.
Almost all banks world wide offer this account type in order to enable its clients to deposit and withdraw at any time. The client can withdraw cash from the bank branch itself or through ATM machines around the globe, even if the ATM is not associated with his own bank.
One particularly practical benefit of the current account is that it offers the client an easy way to access his account online through a dedicated mobile app.
A Savings Account is another type of bank accounts that allows the client to save his money for a certain period of time. The depositor accumulates interest on his funds held in the account. There are no restrictions on the number of withdrawals from the balance.
This account type offers the client the opportunity to both save and grow his deposited funds, and also helps adopt his financial and savings plans.
As for the Term Deposit Account, which is the third type of banking accounts, it allows the client to deposit his money for a specified amount of time. In return, the client earns profit margins higher than those of the “savings account”. In addition to time terms, other conditions surround the client’s ability to withdraw the funds, including the use of penalties when the depositor requests a premature withdrawal. A minimum opening deposit applies as well. The client’s ability to deposit or withdraw in this account is often restricted by several limits. In addition, there are consequences should the client opt to withdraw from a conventional fixed deposit account before it expires, including losing all interests generated.
