Bank account

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

Nature of a bank account

In most legal systems, a deposit of funds in a bank is not a bailment; that is, the actual funds deposited by a person in a bank cease to be the property of the depositor and become the property of the bank. The depositor acquires a claim against the bank for the sum deposited but not to the actual cash handed over to the bank. In accounting terms, the bank creates ("opens") an account in the name of the depositor or a name directed by the depositor in which the amount received is recorded as a transaction. The deposit account is a liability of the bank and an asset of the depositor (the account holder).

On the other hand, a bank can lend some or all of the money it has on deposit to third parties. Such accounts, generally called loan or credit accounts, are subject to similar but reverse principles of a deposit account. In accounting terms, a loan account is an asset of the bank and a liability of the borrower. Loan accounts may be unsecured or secured with collateral from the borrower, and they may be guaranteed by a third person, with or without security.

Each financial institution sets the terms and conditions for each type of account it offers, and when a customer applies for the opening of an account, and is accepted by the institution, they form the contract between the financial institution and the customer in relation to the account.

The laws of each country specify how bank accounts may be opened and operated. They may specify who may open an account, for example, how the signatories can identify themselves, deposit and withdrawal limits among other specifications.

The minimum age for opening a bank account is most commonly 18 years. However, in some countries, the minimum age to open a bank account can be 13 years, and accounts may be opened in the name of minors but operated by their parent or guardian. In general, it is unlawful to open an account in a false name.