Types of Deposit Accounts: Which One Should You Choose to Invest your Money? |
Posted: February 7, 2019 |
The primary role of the Deposit Account is to help people save money. All nationalized as well as state banks offer a range of deposit accounts varying on the basis of varying customer requirements. Some of the prominent deposit account available in India are Savings Account, Current Account, Fixed Deposit Account, Recurring Deposit Account, etc. When money is deposited in a Term Deposit Account, it has to be invested for the fixed period known as a tenor. Similarly, when money is deposited in Demand Deposit Accounts, it can be withdrawn as and when required. Term Deposit a type of deposit accounts that offers interest rates on the applicable terms and conditions but Demand Deposit Accounts may or may not offer interest rates. Also, the interest rates applied by different financial providers are different. The most common Term Deposit Account is Fixed Deposit (FD) and the most common Demand Deposit Account is Savings Account. Prominent Deposit Accounts in India Some of the prominent deposit accounts in India are as follows: Savings Account The Savings Account is a type of Demand Deposit Account as mentioned above. Some financial providers may demand a minimum balance requirement in the Savings Account while some offer the zero balance facility. You can withdraw from this account without any restrictions other than the minimum balance requirement using cheque, ATM, etc. A fixed rate of interest is offered on deposits in this account which is calculated by the power of compounding. Current Account The Current Account is a type of Demand Deposit Account that offers the highest liquidity among all other investments. Withdrawals can be made on a daily basis without any restrictions. However, no interest rates are provided for this investment, and you might need to pay a few charges for the account management. Also, you might have to maintain a minimum balance in this account for active and smooth usage. Recurring Deposits The Recurring Deposits Account is a type of term deposits wherein you need to deposit a fixed sum for a fixed term in regular intervals. This investment would be ideal for salaried individuals who receive a fixed salary every month. The usual tenor of an RD ranges from 6 months to 120 months. Fixed Deposits The Fixed Deposit Account is a type of Term Deposit Account wherein you have to deposit a lump sum money for a fixed tenor. Unlike RD, you have to make a one-time deposit to open an FD. The interest payouts can be opted on a monthly, quarterly, half-yearly, or yearly basis or can be received at the time of maturity of the account along with the maturity amount. FDs offer the highest interest rates as compared to all other investments irrespective of the type of deposits. Experts suggest investing in an FD to earn high returns with minimal risks of interest rates fluctuations. However, you can choose to diversify your portfolio by investing in different Deposit Accounts at the same time. In fact, you can open multiple FD's at the same time with different tenors and ladder your investments to earn higher investment returns. Bajaj Finance is deemed to be one of the leading and fasting growing Non-Banking Financial Companies (NBFCs) of India. Below mentioned are the perks of investing in an FD with Bajaj Finance:
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