Published 12 July 2021, The Daily Tribune

When setting financial goals for saving — whether for building an emergency fund or saving for future expenses — it is very important to know where you should put your money.

This is where banks come in, which is among the safest places to save and store one’s money. Have you wondered what different bank accounts are available, and why there is a need for different deposit products? This article aims to provide information on the different types of account available and their features.

Regular deposit account

A regular savings account is offered to a wide range of banking clients, from first-time bank customers to sophisticated high-value clients. This account is basically for savings and to safely store one’s money while earning a minimal interest.

Basic deposit account

A basic deposit account refers to interest- or non-interest-bearing account designed to promote financial inclusion. This account is to the unserved and underserved sector to receive and make payments, as well as have a facility for store of value. It will have the basic functionalities that will characterize ease, accessibility, convenience and reasonable cost for both banks and customers.

ts key features include a simplified Know-Your Customer for low-risk customers, wherein identifying the customer and verifying their true identity may be based on any document or information reduced in writing, which the covered person deems sufficient to establish customer’s identity; a lower opening amount; no maintaining balance and dormancy charges; and a maximum balance of P50,000, which if exceeded will convert the basic deposit account to a regular deposit account.

Demand deposit

Demand deposits, more popularly known as “current” or “checking” accounts, are those that are subject to withdrawal by check. Caution must be made in dealing with demand deposits because the provisions of Batas Pambansa 22 (An Act Penalizing the Making or Drawing and Issuance of a Check Without Sufficient Funds or Credit), also known as the Bouncing Checks Law, govern the same with regard to checks drawn against insufficient funds and checks drawn against closed accounts.

Time deposit

Duly licensed banks in the Philippines may issue certificates of time deposit to evidence a time deposit placement. Time deposits are interest-bearing deposits with specific maturity dates and evidenced by certificates issued by the bank. A time deposit provides for a higher interest rate when the deposit is not withdrawn within the required fixed period; otherwise, it earns interest pertaining to a regular savings deposit. Having a fixed term and the reduction of interest rates in case of pretermination are essential features of a time deposit (International Exchange Bank vs Commissioner of Internal Revenue, GR 171266, 4 April 2007).

The certificate is a written acknowledgment or proof of the receipt of a sum of money on deposit, which the bank or banker promises to pay to the depositor, to the order of the depositor, or to some other person or his order, whereby the relation of debtor and creditor between the bank and the depositor is created. A certificate of deposit is also defined as “a receipt issued by a bank for an interest-bearing time deposit coming due at a specified future date.”

Under the Manual of Regulation for Banks, interest or yield on time deposit may be paid at maturity or upon withdrawal or in advance, provided that, interest or yield paid in advance shall not exceed the interest for one year.

A time deposit not withdrawn or renewed on its due date shall be treated as a savings deposit and shall earn interest from maturity to the date of actual withdrawal or renewal at a rate applicable to savings deposits.

Regardless of the differences between these types of accounts, there are certain common features among them such as secrecy and confidentiality of bank deposits and deposit insurance coverage.

Republic Act 1405, known as the Bank Secrecy Law, provides that all deposits of whatever nature with banks or banking institutions in the Philippines, including investments in bonds issued by the government of the Philippines, are considered as absolutely confidential in nature. They may not be examined, inquired or looked into by any person, even by the government, except upon the written permission of the depositor, or in cases of impeachment, or upon order of a competent court in cases of bribery or dereliction of duty of public officials, or in cases where the money deposited or invested is the subject matter of litigation.

All bank deposits, whether denominated in local or foreign currencies, are covered by the Philippine Deposit insurance Corporation which provides a maximum deposit insurance coverage of P500,000 per depositor per bank. All deposit accounts of a depositor in a closed bank maintained in the same right and capacity shall be added together to determine this ceiling.

Always consider what features or benefits a bank account has to offer that are most important to you. These can include online and mobile banking access, earning points/rewards on purchases or payments to bills, ATM availability or the ability to earn through interest rates. Ultimately, choosing the right bank account has to do with servicing one’s banking needs and preferences, and of course, safeguarding one’s hard-earned money.

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