- What are the different banking deposits in India?
- Read this post to know about popular deposit products such as FD, RD, Savings, and Current Account
We hear about the importance of savings since our childhood from our parents in the same way as they would have in their youth. Savings is one of the habits rooted deeply in us. There are several banks that provide several kinds of deposits. These products not only help people in keeping their hard-earned money safe in the bank but also help them in getting healthy returns by providing lucrative interest rates.
When we list top banking deposits in India, there are mainly four of them – Savings Account, Current Account, Fixed Deposit (FD) and Recurring Deposit (RD). Provided by all the leading banks of India, these banking deposit products are quite popular among the customers because of the security they offer if they need urgent funds. An individual can choose any of the banking deposits according to his or her lifestyle, employment and savings habits. In this article, we will cover different aspects related to these banking deposits, such as their features and benefits that you can enjoy. You will understand these products better after reading this article. So, keep reading!
What are the Different Banking Deposits?
As we told, there are mainly four banking deposits popular among the customers. These are Savings Account, Current Account, Fixed Deposit (FD) and Recurring Deposit (RD). Several individuals have one or more than one of these banking deposits at some point in their lives to keep their hard-earned money safe in the banks. We are telling you in detail about each of them below. Have a look.
First, we will talk about one of the most popular banking deposits among the customers. This deposit is known as the Savings Account. Over 80% of India’s population has a savings bank account currently. By this figure, you can have an estimate of its popularity. So what is the use of a Savings Account? Well, people use a Savings account to keep their money safely in the banks that also provide interest on the same. However, interest rates on Savings Bank Account tend to vary from one bank to another. As you can see from the name, a savings account helps people in understanding the importance of money-saving.
We are showing some of the features of the Savings Bank account below. Please check!
- The best thing about a Savings Account is that anyone can open it, be it minors or Senior Citizens. Children (below 18 years of age) can open a Minor’s Savings Account. So, there is no restriction of age when it comes to a Savings account.
- To open a Savings Bank Account, you will need a minimum deposit amount. This amount tends to change from one bank to another bank. Some banks also offer Savings Accounts with Zero opening balance. It means you can open an account without depositing any amount to your account.
- With your Savings Account, you can send or receive payments with facilities like NEFT and RTGS.
- On opening a savings bank account, you will also get a Debit Card that will help you in different things like Bill payment, Money Transfer, Recharges, Cash Withdrawal. Some banks also provide cashback offers on their debit cards on shopping online or offline.
- Your money in the Savings Account will keep growing over time because of the interest rates offered by the banks.
- Some banks also offer exclusive benefits on other banking products to customers who have a savings account with them. Like an existing savings bank account holder can get lower interest rates on loan facilities provided by the bank.
- With a Savings Account, facilities like Internet Banking, Mobile Banking, Passbook comes free of cost. Some banks also provide free checkbooks with a fixed number of leaves in it. To get more, the bank will charge accordingly.
- In a savings account, the bank allows you to make a limited number of withdrawals. If you want to make more withdrawals, you will need to pay a specific charge on the transaction.
- The overall time to open a Savings Account is quite short as you will only need to follow a simple few steps, submit your KYC documents online or the nearest bank branch, and your account is ready to go.
A savings account is perfect for salaried individuals, whereas, a current account is usually suitable for those people who do business like traders, firms, shopkeepers, business people, etc. The volume of transactions done by these people is generally high. After a savings account, a current account is one of the best banking deposits among customers. Several banks provide the current account to customers in a hassle-free manner. We are showing some of the features of a Current Account below. Please check it out.
- Unlike Savings Account, in a current account, individuals like to make daily unlimited transactions. The reason: business professionals and non-professionals send and receive money frequently as compared to salaried individuals who have a fixed monthly income.
- Current accounts have no limit on daily withdrawals and transactions. It means you don’t need to pay any extra charge on making that excess withdrawal or doing additional transactions from your account.
- As we told, a current account is suitable for business purposes, that’s why banks do not provide interest on the amount in your account. Simply put, a Current account is a No-interest bearing Banking Deposit.
- Some banks offer a Sweep-in facility to the customers having a current account with which any amount above the threshold limit will be automatically converted into Fixed Deposit (FD). With this, you can earn interest on the deposited amount.
- Apart from Zero-balance Accounts, customers will need to keep a minimum balance in Current Account. You also need to remember that this minimum balance is usually higher in current accounts as compared to the savings account.
- Customers can also get the Overdraft Facility on their Current Account. This facility is more like a short-term loan with which you can withdraw more than you have in your account. The overdraft limit will vary from one customer to another basis his/her overall profile and transaction history.
Fixed Deposits (FD) are one of the most efficient banking deposits for those people who want to safely invest their money for two purposes – Saving for emergencies and earning interest on the same. Currently, several banks and NBFCs offer Fixed Deposit schemes for a tenure of as short as seven days to a maximum of 10 years. Fixed Deposits provide you the much-needed security on your hard-earned money, and over time, you can earn interest on your deposited money too. Here are some of the salient features of the FD schemes. Check it out.
- One of the main reasons behind the popularity of FD among customers is the safety and stability they provide. Customers are usually assured of the return on their deposited money with no chance of losing the principal amount.
- Individuals who want to manage their expenses with an FD can opt for Periodic Interest Payouts (monthly/quarterly/semi-yearly/yearly) according to your convenience.
- Fixed Deposits usually provide higher interest rates as compared to a Savings account. This is also one of the reasons that so many people opt for this. However, interest rates usually depend on various factors such as the age of an individual, FD Tenure, type of FD plan, etc.
- Individuals cannot withdraw the deposited amount before the pre-decided maturity of the scheme. In emergency cases, a certain penalty will be charged for the early withdrawals.
- Senior Citizens can avail of increased interest rates on their deposited money with schemes provided by the banks and NBFCs as compared to individuals below 60 years of age.
- You need to remember that the interest earned with FD schemes comes under the taxable income. To save tax, some banks also offer exclusive Tax Saver Fixed Deposit schemes.
- Individuals can also opt for a Loan Against their Fixed Deposit at interest rates generally 1% to 2% above the interest provided on deposits. The loan amount ranges from 80% to 90% of the overall value of your FD.
Recurring Deposits (RD)
When we talk about the best Banking Deposit of India, Recurring Deposits (RD) is also one of those products that people choose. To put it in more simple terms, Recurring Deposit is an entirely risk-free investment product that is perfect for those individuals who don’t have a huge lump sum amount in their hands. Such individuals can set a fixed share of their income towards depositing in an RD scheme. Banks and even Post Offices provide several RD schemes to customers. We are showing some of the features below. Have a look.
- With a Recurring Deposit, an individual can earn the interest on the amount deposited at a regular interval until the pre-decided maturity period.
- Talking about maturity tenure, Recurring Deposits usually tend to vary from 6 months to 10 years. An individual can choose the tenure according to his/her convenience. After maturity, the total amount will be disbursed to the investor.
- An individual can start an RD scheme with a low amount of INR 10 and change from one bank to another.
- Interest rates on RD tend to vary from one bank to another. Banks usually calculate interest on the amount every quarter.
- If you choose to close the RD scheme before the maturity, banks will charge a fixed premature penalty.
- Post office RDs allow individuals to make partial withdrawals if an individual has been maintaining his or her account for more than a year.
- Senior Citizens can earn higher interest rates as compared to individuals with regular accounts.
- A Recurring bank deposit scheme also helps individuals in making savings a habit as you will be making fixed monthly installments.