In today’s market, there are a plethora of opportunities for everyone to get a start on investing. You can either invest in low-risk products that give reasonable returns and have a better guarantee on returns or go with high-risk ones that can help you increase your wealth in a short period of time.
The best types of bank account that let you convert your surplus amount into a high yielding asset to investing in high-performing stocks, the range of investment avenues in the market are wide.
Let’s take a look at the different smart investment options available to you, which gain considerable income from it over the years.
Types of Bank Account in India
- Current Account
- Saving Account
- Recurring Account (RD)
- Fixed Deposit Account (FD)
- Senior Citizen Saving Scheme
- Salary Account (No-Frill Saving Accounts)
- Demat Account
- NRI Account.
- NRO Savings Account
- Kids Account (Sukanya Samridhhi Yojna for Girl Child)
A current account is a liquid deposit account that allows flexible transactions and doesn’t come with a transaction cap that limits the number of times you deposit or withdraw money. It caters to both professionals and companies alike.
This type of bank account is generally a non-interest bearing one, but this depends upon the lender, and it usually needs a higher minimum balance than that of a savings account. Keep in mind, there’s a penalty charged for every time the minimum balance isn’t maintained.
A savings account is a type of bank account that held in a financial institution that gives your principal amount security while letting you gain considerable interest rate. Saving Accounts are generally ideal for salaried individuals or people who have a regular source of income.
Saving Accounts have an upper limit on the number of withdrawals and would require you to submit PAN details if the withdrawals exceed Rs.50,000. You’d be required to maintain a minimum balance, devoid of which you’d have to pay penalty according to the terms of the lender you’re banking with.
Also, Read This: Smart Investment Options in India
Recurring Deposit Account is a type of bank account that deducts stipulated amounts of money from your bank or salary account every month. The investment tenure ranges from six months to ten years and can be jointly managed by any family member.
The interest is generally the same as that of the Fixed Deposit account. Senior citizens can gain an extra 0.50% interest, thanks to various schemes in play in the market. Some banks let you take a loan against the recurring deposit while offering a lower interest rate than that of a Personal Loan.
Fixed Deposit(FD) Account
Fixed Deposit is a type of account where you deposit a certain amount of money for a fixed time period while earning interest on it. You can’t withdraw money from this account before the maturity date without getting charged a penalty and losing out on earning returns from some of the best FD interest rates in the market.
The main benefit of a Fixed Deposit is earning higher interest on the excess money you have. The amount can be deposited only once and can have a tenure ranging from 7 days to 10 years. You can use FD bank account as collateral to get yourself a small loan with lower interest rates.
Senior Citizen Saving Scheme
Senior Citizen Saving Scheme runs by the India government for the elderly. In Senior Citizen Saving Scheme, Senior Citizens get better interest compared to other government Schemes. You can deposit minimum Rs. 1000 or multiple of Rs. 1000 in Senior Citizen Saving Scheme. However, a person can’t deposit more than Rs. 15 lacs.
Senior Citizen Saving Scheme has many such features that make it special from other schemes. It not only gives you the highest fixed interest return, but also provides the maximum tax saving (exemption under 80C) facility. It’s a type of bank account in India where Senior Citizen can get maximum benefits in their retirement age.
The biggest advantage of the Senior Citizen Saving Bank Account is the high interest rate available on it. It is usually 0.7% higher than the interest rate of PPF. Currently (Febury 2020) the Senior Citizen Saving Scheme has an interest rate of 8.6%, which is higher than the interest rate offered in PPF (7.9%) or FD of any government bank.
Salary Account (No-Frill Accounts)
A Salary Account is No-Frill type of Bank Account i.e. Opened for the Salaried Persons. The Bank opens the salary account on Zero Balance Account. Salary accounts are also like other type of bank accounts but in Salary Account there is No minimum balance account limit and are opened only on zero balance.
Benefits of Salary Account
- The biggest feature of this account is that it is a zero balance account where there is no need to keep minimum amount in the account.
- If the salary is not deposited in the salary account for 3 months, then the bank converts it into a savings account.
- If you have an account, then you can easily get other banking services like credit card, easy loan facilities, withdrawal, overdraft.
- If you change the account from one bank to another, even in case of salary account, the bank keeps the process simple.
- Free unlimited transaction from any bank’s ATM
For investing in the stock market, it is necessary to have a demat account. In addition to shares in a demat account, mutual fund units, debentures, bonds and government securities can also be kept. A demat account is also called a beneficial owner or BO. Explain that a demat account is opened by a bank, broker or financial institution.
The demat account also acts like a bank account. Here too, the bank balance can only be entered in the passbook, you cannot keep it in physical form, it is also protected electronically, and debited and credited like a bank account.
Now that you know the different types of bank account available in the India, make a sound decision depending on your requirements. Seek professional assistance from the financial institutions or banks you approach to get better insights about each product and process. Here we are presenting Types of Bank accounts in India and Their Interest Rates (P.A).
Types of Bank Account & Interest Rates
|Types of Accounts||Rate of Interest (p.a.)|
|Savings Account||Up to 7%|
|Current Account||Not Applicable|
|Recurring Account||Up to 6.75%|
|Fixed Deposit||Up to 7%|
|Senior Citizen Saving Scheme||Up to 8.6%|
|Sukanya SamriddhiYojna||Up to 8.5%|