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Dear lecturer,
Could you please tell me the the similarities and differences between these accounts ?
Saving account, Current account and fixed deposit account. Which account do we get most benefits from ?
If I use ATM card, is it a current account ?Although I will answer you, the differences are not really relevant for the Paper F3 exam – as far as the exam is concerned the are all assets.
A savings account is an account that earns interest and the rate of interest is usually variable – some days it may be higher and some days lower. Usually if you want to take the money out then you have to give notice in advance. (The exact rules depends on the bank – they can set whatever rules they want.)
A current account is the account you use from day to day, and usually it will not earn interest. This is the account that your ATM card will take money from.
A fixed deposit account is where money is saved for a fixed period and earns interest at a fixed rate. If you take out money early then there will be a penalty to pay.
Savings Account
As the name indicates, this account is meant for saving purposes. Any individual either single or jointly can open a savings account. In these accounts one has to maintain minimum balance as low as Rs 1000/ in some PSU banks while it is Rs 10,000 and above in private sector banks. In savings account number of financial transactions are restricted. Interest rates are higher when compared to current account. Any cash transactions of Rs 10 lakhs and above in a year will be informed to the IT department. In case, if you do many cash transactions and issuing of cheques in a savings account, banks have all the right to question you on the income and reason for transaction.
Current Account:
Current account is mainly for business persons, firms, companies, public enterprises etc. This is useful when a person does a number of business transaction on daily basis. While, there is no interest paid on amount held in the account, there is no limit on number of transaction. In case of ATM withdrawal if you have a salary account or zero balance account you should opt for the savings account.
Fixed Deposit:
Fixed Deposit, also called Term Deposit is an investment where the interest rate is guaranteed not to change for the nominated term, so you know exactly what your investment is worth.
godfather1:
Firstly, please do not answer in this forum. It is called the “Ask the Tutor Forum” and you are not the tutor.
Secondly, whether or not what you have written is true in your country is of no relevance whatsoever. This is the ACCA Paper F3 Forum, and in the UK (and, more importantly, in the ACCA exams) what you have written is not true. The correct answer for the ACCA is the one that I have already given.
Thirdly, this website is not to be used for free advertising – the link you gave in your post has therefore been removed. If you wish to advertise on our website then you should ask for our rates card!
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