Deposit

What are the types of Deposits?

There are two types of deposits:

1) Time Deposit:

A time deposit, also known as a term deposit, has a fixed interest rate and a specified term. The depositor cannot withdraw any amount before the term ends without incurring a penalty fee.

2) Demand Deposit:

Under demand deposits, a person can withdraw money from their bank account without prior notice. There is no fixed tenure, but the account earns interest, which is typically lower than time deposits. These funds are held in accounts that allow easy access to money, either by visiting the bank or using an ATM.

What are the types of Time Deposit?

1) Fixed Deposit

A fixed deposit is a large sum of money kept in an account for a fixed period at a predetermined interest rate. The depositor can withdraw the amount after the maturity period, but early withdrawal incurs a penalty fee. Fixed deposits are considered a safe investment.

2) Recurring Deposit

A Recurring Deposit (RD) is an investment option offered by banks, with terms ranging from 6 months to 10 years. It allows you to set aside money every month, ensuring safe returns for the future.

3) Certificate of Deposit

A Certificate of Deposit (CD) is issued by banks or financial institutions for a fixed period and at a fixed interest rate. CDs typically carry higher risks and usually have shorter maturity periods.

4) Special Deposits

Some deposits offer higher interest rates for special categories, such as senior citizen schemes and minor schemes.

What are the types of Demand Deposit?

1) Checking Accounts

A checking account allows people to withdraw and deposit money without earning interest. There are no time limitations for withdrawals.

2) Savings Account

A savings account allows people to withdraw and deposit money while earning a higher interest rate compared to checking accounts. Savings accounts often come with a minimum required balance.