Question

Explain Banks and simple I n t e r e s t in detail please.
I want all ac c 0u nts explained in a proper manner!
DO not co py and paste ans . wers from go 0 gle _/\_

Answer 1

$\LARGE\textsf{\textbf{\color{pink}{Banks and simple interest}}}$

$\Large{\textsf{\textbf{\color{red}{Banks}}}}$

A bank is a government recognized institution that carries out transactions of money. Banks make it easier to plan the use of money, i.e., to do financial planning. We can either deposit cash money in a bank or withdraw cash from it. For that purpose, we must open an account in a bank. Bank accounts are of various kinds.

Different Types of Accounts

➢ Current Account

A current account is mainly for traders and those dealing in money on a daily basis. An account holder can deposit or withdraw money any number of times in a day. The bank issues a passbook for this account and also a cheque book on demand. The bank does not pay any interest on the money in this type of account. Money can also be withdrawn or deposited by cheque.

➢ Savings Account

A person can deposit a minimum amount and open a savings account. In some banks, no minimum amount is required for opening an account. The bank pays some interest on the basis of the daily credit balance in the account. There are some restrictions on how often money can be withdrawn from this account. For this account too, the bank issues a passbook and, on demand, a cheque book.

➢ Recurring Deposit Account

The account holder can decide the amount to be deposited every month in the account. The bank gives an interest on the deposit which is more than that paid for the savings account. Such an account is a means of compulsory savings.

Often it is convenient to have a joint account for say, husband and wife or guardian and ward, etc. Besides, accounts of business partners, housing societies, trusts of voluntary agencies, etc. are required to be operated by more than one person.

➢ Fixed Deposit

A depositor deposits a certain amount for a fixed period in the bank. This deposit attracts a greater rate of interest than the savings account. However, these rates are different in different banks. Senior citizens get a slightly greater rate of interest than the usual.

♦ ATM, credit and debit cards

An ATM (Automatic Teller Machine) card is used to withdraw cash without going to a bank. A credit card or debit card is used to carry out transactions without using cash. An account holder can get such a card on request to the bank.

Points to remember -

✦ We added the capital and the interest accrued on it to find out the amount that Suvidya returned to the bank. Thus,

Principal + Interest = Amount

✦ Total interest $\sf I = \dfrac{P \times R \times T}{100}$ where P = principal, T = time in years, R = rate of interest.

$\rule{222}{1}$

Hope this explanation elps u!