Opening up a bank account is one of the very first steps in financial independence. It’s almost second nature to open up a bank account when you start earning money. However, a lot of people are still unfamiliar with all the different types of accounts.
There are four main types of accounts that you can open with a bank. These types are current, saving, call, and checking. Each account type operates uniquely and serves a distinct purpose. Here’s everything that you need to know about the different types of bank accounts.
A current bank account is a type of bank account that’s familiar to most people. It holds deposits, withdrawals, and contra transactions. These accounts are also known as demand deposit accounts.
Most commercial banks let customers open up a current bank account. This is because current accounts tend to be popular with individuals who need to regularly make many transactions and at the same time may require a low salary range starts from AED 3000 like what FAB offers.
Due to the fluidity of transactions, account owners won’t earn any interest on the deposit. So regardless of the size of their deposit, they won’t earn any interest. There’s also no limit on the number of transactions that you can perform with a current account.
As the name suggests, a savings account is where you can deposit and hold money that you don’t plan on spending immediately. However, even the most basic savings account pays interest on the deposit that you make.
However, the interest rate and the annual percentage yield will differ from bank to bank. Unlike a current account, there tends to be a minimum balance necessary to open a savings account. In some cases, the banks may also charge a monthly maintenance fee.
A checking account is similar to a current account, and it lets you deposit and withdraw money for daily transactions. The only difference is that you get access to a checkbook as well.
After you open a checking account, you can easily deposit any cheques that you receive and pay for things with your cheques. These are some of the most liquid bank accounts on the market and give owners easy access to their money.
While they offer a lot of liquidity, a checking account may have a daily maximum withdrawal limit depending on your bank.
A call account is a hybrid of a savings account and a checking account. It’s a bank account for investment funds.
Like a regular checking account, a call account has no fixed deposit period, provides instant access to funds, and gives the account owner the ability to make unlimited withdrawals and deposits.
At the same time, the account owners also get the benefits of a savings account via the accrual of interest. However, the requirements for opening this type of account of often stricter than all the other accounts.
These are the four main types of bank accounts that you can open in almost every commercial bank. Typically, consumers tend to start with a current account and then make their way to a savings account!