Fixed Deposit Account is also known as:

Question

Accepted Answer

Fixed Deposit Account is also known as a Term Account. Here is a detailed explanation supporting why Option 1 is correct and why the other options are incorrect:

1. **Explanation for Option 1 (Term Account):**
   - A Fixed Deposit Account is referred to as a Term Account because it involves depositing a sum of money for a fixed period or term. During this term, the money earns interest at a predetermined rate, and the depositor cannot withdraw the funds without incurring a penalty. The term can range from a few months to several years, and the interest rate is usually higher than that of a regular savings account. This characteristic of having a fixed term is why it is aptly named a Term Account.

2. **Explanation for Option 2 (Saving Account):**
   - A Savings Account is a type of bank account where individuals can deposit money, earn interest, and withdraw funds as needed. Unlike a Fixed Deposit Account, a Savings Account does not have a fixed term, and the interest rates are generally lower. The primary purpose of a Savings Account is to provide liquidity and easy access to funds, which contrasts with the fixed-term nature of a Fixed Deposit Account.

3. **Explanation for Option 3 (Current Account):**
   - A Current Account is designed for frequent transactions and is commonly used by businesses. It allows for numerous deposits and withdrawals, often without any interest earned on the balance. The focus of a Current Account is on providing high liquidity and facilitating daily transactions, which is fundamentally different from the fixed-term and interest-earning characteristics of a Fixed Deposit Account.

4. **Explanation for Option 4 (Cheque book):**
   - A Cheque book is not an account type but rather a tool associated with certain types of bank accounts, such as Savings or Current Accounts, allowing the account holder to make payments via cheques. It does not relate to the concept of a Fixed Deposit Account, which does not typically involve cheque transactions due to its fixed-term nature.

In conclusion, the term "Term Account" accurately describes a Fixed Deposit Account due to its defining feature of having a fixed term for the deposit, making Option 1 the correct answer.