Current and Deposit Accounts

There are different kinds of bank accounts. The most popular is the current account. It pays no interest but it has other advantages. Firstly, it enables people to keep their money in a safe place. Secondly, it allows them to withdraw it at any time. Thirdly, it provides them with a cheque book so that they do not have to carry a lot of cash.

To open a current account it is necessary to see the branch manager. He has to decide whether the applicant is likely to keep the account in credit. A current account holder can only overdraw with the manager's permission. The manager will therefore want to meet the applicant to get the necessary background information. For example, he will want to know the applicant's occupation and place of work. He will also probably want a reference from his or her employer. If, after the interview, the manager is satisfied with the applicant he will approve the application, arrange for the applicant to be given a cheque book and arrange for a monthly statement to be sent to him or her.

A deposit account is another popular account. It has advantages over a current account. First of all, it is easier to open a deposit account than a current account. There is no need to see the manager. A customer only has to fill in a form and then deposit the minimum amount of money required by the bank. The customer is then given a pass book which he must bring to the bank every time he wishes to withdraw or deposit money. The pass book is customer's record of the account. Secondly, a deposit account earns for the customer.

The bank invests the money that the customer pays in and in return, the bank pays the customer interest. The rate of interest in the UK is not fixed but it is usually between 5 – 10 %. However, a deposit account has certain disadvantages too. In the UK at the moment the maximum a customer can withdraw in one day is £ 20. Another disadvantage is that the customer receives no cheque book and therefore he cannot pay bills so easily.

Test

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Choose the best title.

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Bank accounts

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Forms of saving

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Current and deposit Accounts

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Choose the best answer to complete the following sentence:The pass book is ...

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a document in which a bank records money dealings of a customer

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a record of the account

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a list of things bought and their price

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Choose the best answer to complete the following sentence:The rate of interest in the UK is not fixed but it is usually between ...

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15-20%

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5-10%

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2-3%

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Choose the best answer to complete the following sentence:A current account is ...

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one which pays no interest

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one in which savings are held

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one which earns interest

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Choose the best answer to complete the following sentence:A deposit account is ...

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one from which withdraws can be made by cheque

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one which earns interest

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one from which regular payments are made

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Choose the best answer to complete the following sentence:In the UK at the moment the maximum a customer can withdraw in one day is …

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£ 20

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£ 50

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£ 100

Match the phrases.

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Read the text again and say if this statement is true or false. Justify your answers.The current account provides customers with a cheque book so that they do not have to carry a lot of cash.

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true

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false

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Read the text again and say if this statement is true or false. Justify your answers.Interest is paid by the bank on both current and deposit accounts.

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true

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false

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Read the text again and say if this statement is true or false. Justify your answers.The rate of interest on deposit accounts is fixed.

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true

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false

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Read the text again and say if this statement is true or false. Justify your answers.It is easier to open a current account than a deposit account.

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true

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false

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Read the text again and say if this statement is true or false. Justify your answers.It is easier to get money out of a deposit account than it is from a current account.

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true

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false

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Read the text again and say if this statement is true or false. Justify your answers.Withdrawals are made from a deposit account by cheque.

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true

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false

For economists

Text 1

The way in which a bank is organized and operated is determined by its objectives and by the type of economy in which it conducts its business. A bank may not necessarily be in business to make a profit. Central banks, for example, provide a country with a number of services, while development banks exist to increase the economic growth of a country and raise the living standard of its population. On the other hand, the aim of commercial banks is to earn profits. They therefore provide and develop services that can be sold at a price that will yield a profit.

A commercial bank which provides the same range of services year after year is less likely to be successful than one which assesses changes in the demand for its products and which tries to match products to its customer’s needs. New services are constantly being introduced and developed by commercial banks, and (the full-service philosophy of many banks means that they are akin to financial supermarkets, offering a wide variety of services. However, not every bank may want to offer every kind of financial service.

Many banks offer a combination of wholesale and retail banking. The former provides large-scale services to companies, government agencies and other banks. The latter mainly provides smaller services to the public. Both types of banking have three essential functions which are:

- deposits

- payments

- credits

These three functions are the basis of the services offered by banks. They make it possible for banks to generate profits and to achieve their operating aims.

Several factors have combined to make banking an international business. These include the growth of multinational companies and of international capital markets, the increased competition between the banks themselves, and important improvements in communications and transportation. The major banks of the world have established extensive international operations by acquiring banks in other countries, by extending their own branch network abroad and by establishing correspondent relationships with foreign banks so as to develop profitable joint operations. The operations of these major commercial banks are dynamic and rapidly changing, and their organization is of a global nature.

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Date: 2015-12-11; view: 2198