A bank account is a financial account maintained by a bank for a customer. A bank account can be a deposit account, a credit cardaccount, 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 and every country specify the manner in which accounts may be opened and operated. They may specify who may open an account, for example, how the signatories can identify themselves, deposit, withdrawal limits among other specifications. For opening a bank account the minimum age is 18 years in most countries, 16 in some others.
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.
Broadly, accounts opened with the purpose of holding credit balances are referred to as deposit accounts, whereas 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 institutions have their own names for the various accounts which they open for customers.
- Transactional account
- Checking account
- Current account
- Transaction deposit (USA)
- Transactional account
- Individual (UK)
- Time deposit (Bond) / Fixed deposit
- Certificate of deposit (USA)
- Tax-exempt special savings account (TESSA)(UK)
- Tax-Free Savings Account (Canada)
- Other types
- Negotiable Order of Withdrawal (NOW) (USA)
- ^“What is debit balance? definition and meaning”. Businessdictionary.com. Retrieved 2013-12-17.
Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.