Bank account

This page was last edited on 12 December 2017, at 11:10.

A bank account is a financial account maintained by a financial institution for a customer. A bank account can be a deposit account, a credit card account, a current account, or any other type of account offered by a financial institution, and represents the funds that a customer has entrusted to the financial institution and from which the customer can make withdrawals. Alternatively, accounts may be loan accounts in which case the customer owes money to the financial institution.

The financial transactions which have occurred within a given period of time on a bank account are reported to the customer on a bank statement and the balance of the accounts at any point in time is the financial position of the customer with the institution.

The laws of each country specify the manner in which accounts may be opened and operated. They may specify, for example, who may open an account, how the signatories can identify themselves, deposit and withdrawal limits and many other matters.

1967 Midland Bank letter on electronic data processing.JPG
letter by the Midland Bank to a customer, informing on the introduction of electronic data processing and the introduction of account numbers for current accounts

Account structure

Bank accounts may have a positive, or credit balance, where the financial institution owes money to the customer; or a negative, or debit balance, where the customer owes the financial institution money.[1]

Broadly, accounts opened with the purpose of holding credit balances are referred to as deposit accounts; whilst accounts opened with the purpose of holding debt balances are referred to as loan accounts. Some accounts can switch between credit and debit balances.

Some accounts are categorized by the function rather than nature of the balance they hold, such as savings account, which routinely are in credit.

All financial institution have their own names for the various accounts which they open for customers. A financial institution has a variety of fees for the maintenance of various accounts and for the processing of certain transactions.

Types

See also

References

  1. ^ "What is debit balance? definition and meaning". Businessdictionary.com. Retrieved 2013-12-17.

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