7. Bank Accounts

There are two reasons for using bank accounts: convenience and safety in money use provided by a current account (US: checking account) at a bank; andsmall but regular interest that is provided by a deposit account (US: savings account) if you want to save your money for a long period of time.

The checking account is an account for receiving money from other people (wages and salary paid into the account or different amounts of moneyreceived from the customers). It is money that a customer deposits in order to use that money to write checks, so it is the account for paying your bills, rent, subscriptions and other expenses. If you keep your money in your checking account you can go shopping without having to carry cash around with you. When you want to make a payment you simply fill in the amount on a check and hand it together with your check card to the cashier in the shop.

A checking account holder can use all banking services. You can have money sent abroad, buy and sell stocks, place standing orders or authorize direct debits. And of course, you can apply for an overdraft or other loans. Checkingaccounts are called demand deposits, that is, a customer can withdraw the money without waiting for any period of time.

The savings account is the account for money that you do not need for day-to-day expenses and want to save it and to receive some interest. When youopen your savings account you receive a passbook or savings book. Every deposit or withdrawal is entered into it by a teller. So you have a complete written record of all transactions with your account. The interest that your money earns is also recorded.

Any money put into your savings account begins earning interest from the day it was deposited. The interest rate can vary from time to time according to the market rate. You can pay money into your savings account at any branch of the bank.

There is a variety of a deposit account - time deposit (orcertificate of deposit -CD) which allows customers to deposit larger amounts of money for adefinite fixed term and earns a higher rate of interest. If you withdraw your money beforehand you will lose your interest rate.

Savings account is free of charge, it earns interest to its holder, so that makes it profitable for customers.

But checking account charges different fees for bookkeeping of the account, service charges for different transactions. Every month a checking account holder receives a monthly statement telling him exactly what has been debited or credited to his account. This statement lists all the checks that the bank paid and all deposits that the account holder made during the month. The bank usually sends the statements with the customer's cancelled checks (the check that the bank has already paid and recorded in the depositor's account. These checks are marked «paid»). The customer then compares the balance on the statement with the balance in his own records by subtracting the total of his outstanding checks (a check that the depositor has written but which has not yet been presented for payment or not yet been cashed).

There are other fees that the bank may collect from checking account holders:

• for a stop payment order: when a depositor decides that he doesn't want the bank to pay a payee, but he has already written a check to that person, he maygive the bank a stop payment order. The bank will then refuse to pay this check, and charges the depositor a fee;

• banks also charge a depositor a fee when he is overdrawn. A depositor is overdrawn when he writes a check for more money then the balance in his account. The bank marks the check «in red», returns it, and charges a penalty for it.

There are new accounts - NOW and Super NOW accounts that offer their customers all the convenience of a checking account with the incomeadvantages of a savings account.