Bank Accounts

There are two general reasons for using a bank account. The first and most common is the convenience and safety provided by a current account at a bank. The second is that small and perhaps regular surpluses are available to be saved, and for this purpose a bank provides deposit accounts.

A deposit account will not offer a high rate of interest and would not be the best way to save large sums of money for any long period of time, but it is designed to make saving simple, convenient and safe. It is especially appropriate for those who may save small amounts from time to time without any planned regularity or for those who wish to save for a particular purpose in the immediate future, for example for annual holidays or for the purchase of a major item such as a car.

Most customers of a bank who have opened a deposit account will also have a current account and this makes the transfer of amounts of money from one to the other an easy matter. Regular payments into a deposit account can be made through a standing order to the bank that will automatically transfer the agreed amount according to your instructions. Other payments are made on standard forms but it is most convenient and provides a useful record if the depositor uses a paying-in-book. Interest is calculated every six months and added to the account. The rate of interest varies from time to time and is publicly advertised in any bank. Because the bank uses money deposited with them to lend to others it normally requires about seven days notice of intention to withdraw money from a deposit account, but unless there is a heavy demand for money they are not likely to insist on this and cash is often immediately available to those who wish to withdraw it. There is an assumption that such notice was given and you would lose seven day’s interest on the money.

The increasing need for security and the use of computers in wage payments have combined to make it more common to have a bank account than to be without one. This kind of account is a current one and its most common use is a single regular payment in either a weekly wage or a monthly salary and regular payments out to meet the normal everyday expenses. Most payments are still made by cheque although the use of the standing order or the direct debit is becoming very common. It is normally expected that a current account will remain in balance and customers who regularly maintain an agreed minimum balance are often given the services of the bank without charge. In general, however, charges are made which vary with the size of the balance, the amount of use of the bank’s services and the number of transactions. If the account is overdrawn a further charge, which is interest on the overdrawn amount, is also made.

Overdrafts are not permitted automatically and anything other than a small temporary overdraft would have to be by agreement with the bank manager. Such a facility is often useful particularly when there is a short term disbalance between income and expenditure. On the other hand, since money in a current account does not attract interest, it is not a good idea to maintain large cash balance, these would be better transferred to a deposit account or to an alternative form of saving.

Assignments

I. Answer the questions.

1. What are two general reasons for using a bank account?

2. Who is a deposit account especially appropriate for?

3. What can regular payments into a deposit account be made through?

4. How often is interest calculated?

5. What happens if the current account is overdrawn?

II. Translate the following sentences into Ukrainian. Put questions to any two of them.

1. The first and most common reason for using a bank account is the convenience and safety provided by a current account at a bank.

2. The second is that small and perhaps regular surpluses are available to be saved, and for this purpose a bank provides deposit accounts.

3. A deposit account is especially appropriate for those who may save small amounts from time to time without any planned regularity or for those who wish to save for a particular purpose in the immediate future, for example for annual holidays or for the purchase of a major item such as a car.

4. Regular payments into a deposit account can be made through a standing order to the bank that will automatically transfer the agreed amount according to your instructions.

5. Since money in a current account does not attract interest, it is not a good idea to maintain large cash balance, these would be better transferred to a deposit account or to an alternative form of saving.

III. Translate the following sentences into English.

1. Оскільки депозитний рахунок не пропонує високої відсоткової ставки, він не є найкращим способом заощадження великих сум коштів на будь-який довгий період часу.

2. Більшість клієнтів банку, які відкрили депозитний рахунок, також матимуть поточний рахунок, що робить переказ грошових сум з одного на інший простою справою.

3. Більшість платежів усе ще здійснюється за допомогою чеків, хоча використання постійного доручення клієнта банку чи прямого дебіту стає більш традиційним.

4. Оскільки гроші на поточному рахунку не приносять високих відсотків, не варто утримувати великий залишок готівки, краще переказати її на депозитний рахунок чи обрати альтернативну форму заощаджень.

IV. Name the following definitions.

1. An account, which does not offer a high rate of interest and would not be the best way to save large sums of money for any long period of time, but designed to make saving simple, convenient and safe.

2. An account, where money is being paid into and paid out of as often as the customer finds convenient.

3. An account, which enables small savers to put money away for particular purposes, for example for holidays.

V. Fill in the following table.

Type of a bank account	Main features

VI. Choose the right answer.

1. A current account is

A – one which is available for the time being;

B – one in which savings are held;

C – one which is used all the time for day-to-day transactions.

2. A deposit account is

A – one from which regular payments are made;

B – one in which savings are held;

C – one from which withdrawals can be made by cheque.

3. Rate of interest is

A – the percentage of each unit money paid for its use;

B – rate of profitability;

C – portion of an investment on which the interest is calculated.

4. An overdraft is

A – an amount by which the balance in a current account exceeds the value of a cheque drawn from it;

B – an amount by which the value of a cheque exceeds the balance in the current account;

C – an excessive balance in a current account.

VII. Work in chain. Ask your neighbour a question based on the text. He or she has to report your question, answer and ask his one to the next student to continue chain work.

VIII. Sum up what the text says about depositing money with a bank:

1) reasons for using a bank account,

2) types of bank accounts,

3) overdrafts.