What Are the 4 Types of Deposit Schemes?

Deposit schemes offered by banks can help you manage your money. Individuals can invest in these schemes to save and accomplish their financial goals. Banks provide four types of deposit schemes to their customers. Each scheme has its own features and benefits. Read on to find out the details! 

Types of Deposit Schemes Offered by Banks 

Here are four types of bank deposit schemes and accounts in India. 

Savings Account

• It is a regular deposit account that enables you to save money regularly in your bank account. 
• The account holder is eligible for a minimum interest rate on their deposits. 
• You can open your savings account with a minimum deposit amount, specific to the terms and conditions of the bank. 
• It is easy to deposit and withdraw money at any time. However, withdrawals are limited to the number of transactions allowed by the bank for each month. 
• You can open a regular savings account, a senior citizen savings account, a child savings account, or a joint savings account. 

Recurring Deposit

• You can invest your money for a fixed tenure to get interest on it. 
• Investors can deposit money in instalments depending on their financial situation. 
• The tenure for recurring deposits is fixed and may range from 6 months to 10 years. 
• You may end up paying a penalty for premature withdrawals. 
• RD interest rates may vary from one bank to another. Generally, it ranges between 5-7% for individuals below 60 years of age. 

Fixed deposits 

• Fixed deposits are one of the most popular investment plans in India. 
• An individual invests their money for a fixed period of time and earns interest on their deposit. 
• Fixed deposit tenure may range from 7 days to 10 years. 
• The investor deposits the amount in a lump sum, and premature withdrawal is not allowed. 
• Fixed deposits provide an interest rate of 5 to 9%, which is greater in comparison to other deposit schemes. 

Current Account

• This type of deposit scheme account is also known as a demand deposit account. 
• Most traders and businesses that make cash transactions frequently open their current accounts.
• The investor can avail of an overdraft facility on their current account. This means they can withdraw an amount exceeding what is available in the account. 
• No interest rate is given to the investors on their current accounts. 
• The bank may charge you maintenance and service charges against your current account. 

In Conclusion, 

Banks provide four types of deposit schemes to cater to the unique needs of their customers. If you want to invest for the long term, you can select between recurring deposits and fixed deposits. However, if you want to make short-term savings, you can deposit money in savings accounts. You can also invest your money in current accounts if you are a business owner or trader and deal in day-to-day cash transactions.

Also Read: 

5 Short-Term Investment Options To Invest in 2023