TYPES OF BANK ACCOUNTS

DEFINITION a bank account is a monetary account with a banking institution recording the balance of money for a customer they can have a positive/credit balance where the bank holds money on behalf of the customer or a negative/debit balance where the customer owes the bank some money banks send statements of account to their clients to inform them about the state of their account ©Lenka Lexová

I. DEPOSIT ACCOUNT the bank holds money on behalf of the account holder some banks charge a fee for this service, others pay the client interest on the deposited funds the account holder holds rights to the deposit the withdrawal of money depends on the terms and conditions of the account and the bank ©Lenka Lexová

TYPES OF DEPOSIT ACCOUNTS checking account money market account savings account term deposit long term deposits short term deposits ©Lenka Lexová

a) CHECKING ACCOUNT held at a bank or other financial institution in order to provide quick access to funds money is available on demand bank does not offer interest it is not suitable for saving money customer can withdraw money any time and in what amount he wants depending on the funds ©Lenka Lexová

b) MONEY MARKET ACCOUNT has a relatively high rate of interest when the client needs to withdraw money short notice or no notice is needed typically used in the USA ©Lenka Lexová

c) SAVINGS ACCOUNT an account which is maintained by a bank cannot be used directly as money is suitable for saving money some savings accounts require funds to be kept on deposit for a minimum length of time all financial transactions are listed in a passbook or a bank statement to withdraw money you have to give notice to the bank in advance bank pays interest rate to the client ©Lenka Lexová

d) TERM DEPOSITS cannot be withdrawn for a certain term or period of time when the term is over, money can be withdrawn or held for another term the longer the term, the better the interest to withdraw some money it is necessary to give notice to the bank long-term deposits – have higher interest short-term deposits – have lower interest ©Lenka Lexová

II. CURRENT ACCOUNT is an account which enables to withdraw many any time in various ways (electronic payment, money order, ATM)‏ all financial transactions are listed in a bank statement or a passbook on the credit side there are deposits, salaries, incomes of the account holder on the debit side there are payments, money transfers, regular payments (for rent, electricity)‏ do not have high interest ©Lenka Lexová

CURRENT ACCOUNT PAYMENTS cash money (banknotes)‏ cheque and money order (a paper promise to pay) giro (funds transfer, direct deposit) direct debit (pre-authorized debit) standing order (automatic funds transfer) debit or credit card (cashless direct payment at a store or merchant) SWIFT - International account to account transfer ©Lenka Lexová

ACCESS TO CURRENT ACCOUNTS branch networks – allow the clients to receive a wide offer of banking and financial services cash machines (ATM) – automated machines which are used to withdraw cash and check account balances Internet banking – clients can use the bank's secure website to look at balances and statements, perform transactions and payments telephone banking – a call centre or automated service, provided on a 24 hour basis mail banking ©Lenka Lexová

BANK OVERDRAFT occurs when withdrawals from a bank account exceed the available balance this gives the account a negative balance and the bank is providing credit banks also offer overdraft facility – it is credit limit on which bank and client agree on the opening of the account if the amount overdrawn is within this authorised overdraft, then interest is normally charged at the agreed rate ©Lenka Lexová

CURRENT ACCOUNT COSTS banks charge a fee for doing financial transactions per item or on a monthly basis youths, students, senior citizens or high-valued customers do not pay fees for basic financial transactions in some countries, transaction fees do not exist, but extremely high lending rates are the norm ©Lenka Lexová