Question

Distinguish between:

Current Account and Fixed Deposit Account

Distinguish between current deposits and fixed deposits.

Answer 1

Basis	Current Account	Fixed Deposit Account
1. Meaning:	It is that account which is maintained by businessman and others who have regular bank transactions.	It is that account where a fixed sum of money is deposited for a fixed period.
2. Withdrawals:	Customers can withdraw money by cheques.	Customers cannot withdraw during the specified period.
3. Documentation:	The bank gives a passbook, cheque book, statement of account, and pay-in-slip book to the customers.	The bank gives a fixed deposit receipt to the customers.
4. Who takes it?	It is suitable for traders, businessmen, firms, or institutions.	It is suitable for any person with temporarily idle cash.
5. Restrictions:	There are no restrictions on the operation of a current account as long as there is balance in the account.	The amount becomes due on the expiry of the fixed period. If withdrawn earlier, then the rate of interest will be less than applicable.
6. Interest rate:	Normally interest is not given.	The interest rate is higher; the longer the period, the higher will be the rate of interest.
7. Nature of Account:	It is of continuous Nature. It can be operated for any number of years.	It is for a fixed period of time, except when the fixed deposit receipt is renewed.
8. Facilities:	A temporary overdraw facility is given.	90% of the amount of fixed deposit can be given as loan.