Types Of Bank Account | Features & Differences

In this blog post we are going to be looking at the different types of bank account in commerce, their features and difference between savings account and current account.

TYPES OF BANK ACCOUNT

1. CURRENT ACCOUNT: Current account is usually open by businessmen and is required if a customer wish to make payment through Cheques. In a current account, the customer is free to withdraw money on demand. The customer will be given a chequebook which he uses to withdraw money anytime. Holders of current account are not entitled to interest but are charged commission by the bank. They can also obtain overdraft from the bank. Simply put, current account is an account on which cheques are drawn.

Features of Current Account

1. Money can be withdrawn frequently.
2. Customers are entitled to their use of cheque book.
3. Payment of commission is made by customers to the bank.
4. Holders are not entitled to interest.
5. Other people can withdraw money from the account on behalf of the customers.

Procedures for opening a Current Account

1. The customer will collect and fill an application form.
2. He will submit a prescribed number of passport photographs
3. Two guarantors, who are account holders in a bank, must be provided to recommend the applicants.
4. The customer will submit his complete particulars to the bank, showing personal details.
5. The bank will issue him with a pay in slip booklet.
6. He will be issued an account number.
7. He will pay in an initial deposit with the pay in slip.
8. A chequekbook will be given to him.

2. SAVING ACCOUNT: Savings account is operated by low income earners who are small savers. Customers pay small regular savings which will accumulate over time. Holders are entitled to interest but cannot withdraw frequently. The customers will be given passbook with which to make occational withdrawal from the bank.

Features of Savings Accounts

1. Money can only be withdrawn occasionally.
2. It attracts a favorable rate of interest.
3. Holders are issued with passbook.
4. Withdrawal cannot be made by another person on behalf of the customer.

Difference between Savings Accounts and Current Account

1. Customers are issued with passbook – Customers are issued with chequebook in current account.
2. It attracts interest – No interest is given to customers in current accounts.
3. Only the holder can withdraw from the savings account – In current account cheques can be issued to anybody.
4. Withdrawals is occasional in savings account – In current account withdrawals can be frequent.

DEPOSIT ACCOUNT: Deposit account also called time deposit is one of the types of bank account in which money is saved in the bank for a fixed period of time to earn interest. Holders are entitled to higher interest than savings account. Customers can withdraw subject to seven Days of notice. People save money in deposit account for a specific purpose and can be renewed on maturity. The customer will be issued with deposit account passbook. Fixed deposit is withdrawable at an agreed time.

Features of Deposit Account

1. Money is deposited for a specific period.
2. It attracts higher interest rates.
3. Notice of seven days must be given before withdrawal.

In summary: Note the three main types of Bank account and also note thier features and differences.

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