Banking accounts and documents

Bank accounts:

When you open an account for the first time, you need to be familiar with the different types of accounts that are available. Banks usually offer a package of a few different accounts and services.

· Savings account: A bank account that earns interest. A savings account does not have an overdraft facility. You can use a savings account for short-term savings. You earn interest on the amount in the account, but not as much as you would earn with a fixed deposit account.

· Cheque or current account: A bank account that is used to deposit and withdraw money by visiting the bank branch, using an ATM or Internet banking or by writing a cheque. These are usually available to people who earn a regular income. They also have an overdraft facility, which allows you to use more money that you have in your account. Interest is charged on the overdraft.

· Fixed deposit account: A fixed deposit account is aimed at those who have a lump sum they want to invest over a set period of time. The money is deposited into the account and left there until the agreed upon date, when it is released back to the account holder with added interest. You would consider a fixed deposit if you want to save money for a medium to long term.

· Credit account (with credit card): An account either with a store or bank, that allows the account holder to purchase items now and pay for them later. Often the account holder is able to choose between the straight payment plan, where they will pay back the money in one lump sum, or the budget plan where the debt payments are divided up over a set number of payments. The two different payments have two different interest rates.

· Debit account (with debit card): Debit cards can be used to pay for purchases. When the card is swiped, instructions are sent to the account holder's bank to deduct the money from their account. Often this is their main account and is easier to manage than first paying for something with a credit card and then at a later date, transferring money into the credit card account. Usually a debit account does not offer as much credit as a credit account (if any at all).

The type of account you should open depends on your needs. For example, you might not have a fixed income, but want to save money to buy a Playstation, so a savings account would be the most appropriate for your needs as a learner.

Someone who is employed full-time will need a cheque account, so that their salary can be deposited there and they can apply for other benefits attached to this type of account.

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