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 businessmen 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 cheque.	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 a 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 If withdrawn earlier, then the rate of interest will be less than applicable.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 overdraft facility is given.	90% of the amount of the fixed deposit can be given as a loan.