Bank account is a financial account maintains by a bank that shows inflows and outflows of funds. When you go to a bank, the bank will offer you three main types of accounts including current, saving and fixed deposit account. Current account is used for daily business transactions. Saving and fixed deposit accounts are opened for saving purpose and earning interest or profit. These three types of bank accounts are given below in detail.
1. Current Account
Current account is opened by businessmen for carrying out their business transactions more conveniently. Usually, bank does not pay interest on this account but deducts service charges for management of money. Current Accountholder can access his funds many times a day. There is no limit of deposits or withdrawals. Overdraft facility can be enjoyed here. Accountholder receives a cheque book and bank statement containing details of transactions. The accountholder must keep a minimum required balance in his account. If the balance falls below from the required level, the bank will fine the accountholder at specified rate.
2. Saving Account
Saving account promotes the saving habit among individuals. Interest is paid to accountholder, the rate interest is varied from bank to bank. Generally, it is opened by students, salaried persons, and other people who have fixed or less income. In this account deposits are unlimited. But withdrawn are limited. Depositor can withdraw cash only twice a week. Depositor is provided a passbook, ATM card, and cheque book. There is no overdraft facility. Minimum required balance must be maintained to avoid fine. This account is subject to Zakat deductions in Pakistan.
3. Fixed Deposit Account
This account is opened for a definite period of time with deposit of a particular sum of money. The deposited money can only be withdrawn after the expiry of period. The time period ranges from three months to five years or even ten years. The rate of interest is higher than of saving account. The rate of interest may vary according to amount, period, and bank. This account is also subject to Zakat deduction in Pakistan.