BANK ACCOUNT

A bank account is a financial account between a bank customer and a financial institution. A bank
account can be a deposit account, a credit card, or any other type of account offered by a financial
institution. The financial transactions which have occurred within a given period of time on a bank
account are reported to the customer on a bank statement and the balance of the account at any
point in time is the financial position of the customer with the institution. a fund that a customer has
entrusted to a bank and from which the customer can make withdrawals.

BANK
A bank is a financial institution and a financial intermediary that accepts deposits and channels those
deposits into lending activities, either directly by loaning or indirectly through capital markets. A bank
links together customers that have capital deficits and customers with capital surpluses. The
word bank was borrowed in Middle English from Middle French banque, from Old Italian banca,
from Old High German banc, bank "bench, counter". Benches were used as desks or exchange
counters during the Renaissance by Florentine bankers, who used to make their transactions atop
desks covered by green tablecloths.

Advantages of banking
Commercial banking can help a small business by making it easier to manage day-to-day financial
tasks. An established commercial account with a bank will make it easier to borrow money when you
grow your business. Often a business is assigned a representative who works directly with the
company to find the best services and solutions for the issues the business is facing. Some banks
offer retirement account management for your employees as well as other employee benefits.

Disadvantages of banking
Commercial banking or business accounts are often more expensive than traditional bank accounts.
Banks may charge fees for night deposits, for processing a certain number of checks and for the
payroll services. Depending on the size of your business, some of the services offered may not be
needed, and you may still be charged for the services even if you're not fully using them.

TYPES OF ACCOUNTS

Saving accounts--- are accounts maintained by retail financial institutions that pay interest but
cannot be used directly as money in the narrow sense of a medium of exchange (for example, by
writing a cheque). These accounts let customers set aside a portion of their liquid assets while
earning a monetary return. For the bank, money in a savings account may not be callable
immediately and in some jurisdictions, does not incur a reserve requirement, freeing up cash from
the bank's vault to be lent out with interest. The other major types of deposit
account are transactional account (checking account or current account by country), money market
account, and time deposit.

 ADVANTAGES OF Saving accounts

1.Keeping your money liquid
Savings accounts and money market accounts allow you to withdraw your money at any time, which
is rarely an option with CDs or long-term investment options. Savings accounts allow for unlimited
withdrawals Nevertheless, you can access the money in your savings account when you need it
most.
2.Get started with minimal cash
If you don't have a lot of money to invest, you can begin your saving habits using a savings account.
Savings accounts usually require a minimum amount to get started,
3.FDIC or NCUSIF insured
Your money is extremely safe in a savings account or money market account, making it a great
location for secure saving
4. High-yield savings options
Some savings accounts offer higher interest rates than others. These high-yield options listed on
Bankrate.com are ideal for long-term saving, such as emergency funds. Most of these high-yield
savings accounts are strictly online, which decreases the bank's overhead, allowing for these higher
interest rates.

DISADVANTAGES OF Saving accounts

Low Returns:-
A main drawback of a basic savings account is a limited interest yield. Typical savings funds earn
well below 1 percent in interest These accounts are not the best place to grow your wealth if you
have more money to invest beyond your short-term emergency needs.
Withdrawal Limitations:-
Another limitation of savings accounts is standard regulatory requirements on the number of
withdrawal transactions you can do per month. Basic savings accounts usually allow up to six
transfers in a month
Minimum Balance Requirements:-
Savings accounts usually have minimum initial deposit and average balance requirements tied to
interest yields. You can often get accounts with no deposit and no minimum balance requirements,
but yields are miniscule and you usually pay monthly account fees between $5 to $10.

RECURRING DEPOSIT ACCOUNTS=Recurring Deposits are a special kind of Term Deposits

offered by banks in India which help people with regular incomes to deposit a fixed amount every
month into their Recurring Deposit account and earn interest at the rate applicable to Fixed
Deposits.[1] It is similar to making FDs of a certain amount in monthly installments, for example Rs
1000 every month. This deposit matures on a specific date in the future along with all the deposits
made every month. Thus, Recurring Deposit schemes allow customers with an opportunity to build
up their savings through regular monthly deposits of fixed sum over a fixed period of time.
The Recurring Deposit can be funded by Standing instructions which are the instructions by the
customer to the bank to withdraw a certain sum of money from his Savings/ Current account and
credit to the Recurring Deposit every month.
When the RD account is opened, the maturity value is indicated to the customer assuming that the
monthly installments will be paid regularly on due dates. If any installment is delayed, the interest
payable in the account will be reduced and will not be sufficient to reach the maturity value.
Therefore, the difference in interest will be deducted from the maturity value as a penalty. The rate of
penalty will be fixed upfront. Interest is compounded on quarterly basis in recurring deposits. One
can avail loans against the collateral of Recurring deposit up to 80 to 90% of the deposit value. Rate
of Interest offered is similar to that in Fixed Deposits. At present it seems to be one of the best
method to save the amount yield after years of deposit because TDS is not applicable on RDs.
Taxation of Recurring Deposit Tax Deducted at Source ( TDS ) is not applicable on RDs. However
interest from RD is not tax free. Income tax is to be paid on interest earned from a Recurring Deposit
at the rate of tax slab of the RD holder .

Advantages of a recurring deposit:

Fixed monthly investment: In recurring deposit, you invest a fixed amount every month. It is very
similar to paying the EMI. You can start with less amount. In many banks you can start it with
monthly investment of as low as Rs. 100..
Fixed duration: You can go for a recurring deposit option for a fixed tenure. In most of the banks, you
may choose maturity period ranging from 6 months to 10 years.
Fixed rate of interest: Rate of interest in a recurring deposit is fixed. It remains the same for the
entire duration of the recurring deposit. This interest rate varies from bank to bank and tenure of
recurring deposit. Most of the banks offer it between 3.75% and 9.5%.
Disadvantages of recurring deposit: In case of urgency, money can not be withdrawn instantly.