In order to be a customer of a commercial bank and enjoy the banking services, one needs to have a bank account. Basically, there are three types of accounts one can open in a commercial Bank: 1. Current Account, 2. Savings account and 3. Fixed account. In this article, we’ll discuss different aspects of a current account and guidelines to open and operate it properly.
What is a Current Account?
A current account is the type of account that provides its holder the opportunity to deposit and withdraw money unlimited times in the respective bank. The current account is also known as a transactional account, checking account, and demand account. This type of account is commonly opened for frequent banking transactions by the account holder. A current account is highly liquid and the respective bank is bound to meet the demand of a current account holder whenever he/she wants to deposit or withdraw a portion or the full amount of the deposited money. It’s are most commonly used by businessmen and different organizations for their regular transaction of money in business and personal life.
Features of a Current Account – Features That are Offered by Banks to the Clients
Below are some key features that differentiate a current account from a deposit or fixed account.
Limitless Transactions
The number of transactions by a current account holder is not limited in any bank. The account holder or on behalf of the holder anyone can deposit money on the credit account of the holder and withdraw by or on behalf of the holder. However, these transactions must be done on weekdays.
Non-Interest Bearing
a current account is a non-interest-bearing account which means the account holder will not get any kind of interest on the money he deposits. However, there are some special cases where a current account can bear interest. [1]
Checks
The current account holders get a checkbook from the respective banks which they can use to withdraw money or pay money to a specific receiver. This using check feature is the reason why it is called a checking account. [1]
Maintenance of Minimum Balance
To open a current account a minimum amount must be deposited into the balance. This rate varies from bank to bank. The minimum balance cannot be withdrawn until you close your account permanently. [1]
Bank Charges
The account holder must pay some charges and fees to the bank for the services it provides. The major types of fees in a current account are monthly maintenance fee, Overdraft fee, and third-party ATM fee. [3]
Other Features
Online banking services, Bank overdraft, foreign exchange, etc.
Benefits of Having a Current Account
ATM Services
A current account holder can use the ATM booths of the respective bank for smooth transactions. This helps the account holder to avail of this banking service 24/7. Even banks partner up with other banks to provide third-party ATM service. So, if you have a current account, you can avail of ATM services in different locations where your bank does not have any ATM booth.
Overdraft
The banks provide the current account holder the opportunity to withdraw money more than what has been deposited into his/her account. This service is called bank overdraft and the customers have to pay a certain amount of interest for such service. You can take this short-term loan in a time of crisis.
Online Banking Services
Banks offer numerous online banking services like electronic fund transfer, online payment, online deposits. You can pay for your online shopping, make business payments, transfer your money to other banks, receive your payment from both home and abroad through your current account. [2]
Mobile Phone Application for Banking
These days, most banks have their own mobile applications which can be used by their customers for banking services. They can check their balance, transfer, deposit, and withdraw money through these apps. Since current accounts are mostly used for day-to-day transactions, these apps help the account holder to keep track of their account more easily.
Debit & Credit card
along with the traditional checking system, banks also provide debit card and credit card systems. You can use these cards to withdraw money from ATMs, make an online payment and pay through a POS terminal. The basic difference between debit and credit cards is that a credit card gives the account holder to avail overdraft opportunity while a debit card can be used to withdraw the deposited money only.
Flexible and Smooth Transactions
Unlike other types of bank accounts, a current account is highly flexible in terms of the transaction. whether it’s a business organization or an individual, a current account can provide its holder with a very smooth transaction service. Payments, money transfers, deposits, withdrawals can be done at any banking hour on weekdays. Besides, there are so many available options to use for transactions.
Interest-bearer
In some special cases a current account can bear interest. Although the amount is not as much high as other types of accounts, this little amount of interest can be helpful to reduce the impact of the charges an account holder pays to the bank for its services. [2]
EMI Opportunity
EMI (easy monthly installment) feature is available for some current account holders. This feature allows a current account holder to purchase products on installment. The installment can be provided to the seller on time each month. Users are highly benefitted by this feature as they can purchase things seen if the account does not contain any big amount of money. But it is notable that all the current account holders cannot use this feature as it’s mostly for the savings account.
Bonuses
sometimes, banks provide bonuses to their current account holders. Few banks offer wavier on the minimum balance on opening a new account, some of them offer bonuses on different festivals. Current account holders avail these kinds of discounts very often. [4]
Mobile Financial Services
Banks sometimes partner up with third-party mobile financial services to provide their clients the opportunity to transact money. a current account holder can transfer or deposit its money through the MFS companies that have partnerships with their respective bank. This makes the transactions easier and more convenient.
Things you Should Know Before Opening a Current Account (tips/tricks/problem)
If you want a great banking experience with a current account, it’s necessary that you have minimum banking literacy before opening an account. There are plenty of sites on the internet that help people to learn about the banking system, terms, and insights. But here are some pro tips that you should know before opening a current account in order to understand the context and have a better experience.K
Firstly, be sure if a current account is suitable for you or not. As discussed before, a current account is mostly for businessmen and people who need day-to-day transactions. So, if you’re not the person who needs this kind of service and you want to earn interest on the deposited money, this account might not be suitable for you or an interest-bearing current account could be considered.
Secondly, ensure that the bank you’re going to open an account in, has branches nearby your business or residence. As you need regular transactions, if the bank is not nearby it’ll be tough for you to keep up your transactions and might also create disruption in your business. Also, see how many ATMs the bank has both of its own and third party.
Thirdly, consider the banks that provide more online services. Nowadays payments, transactions, deposits mostly occur online. So, for a convenient banking experience, you should consider the banks providing services like mobile app, EFT, MFS services, etc. these will help you to save time, resources, and energy.
Lastly, remember that charges can be avoided. The charges a current account holder pays are mostly for overdraft, use of third-party ATM, and absence of minimum balance. If you manage your banking activities wisely these charges can be reduced and, in some cases, avoided. For instance, using more online services, choosing a bank that has ATMs and branches, keeping yourself ahead of overdraft can help you to reduce these costs. Even you can link-up up your savings account with the current one so that you can transfer money to the current account at the time of crisis. It will help you to avoid overdraft and maintain a minimum balance. [3]
Bottom Line
No bank account is superior to others and you must choose the type wisely to have a superlative banking experience. A current account is always there to help its holder a great customer experience journey if it’s suitable for them and they manage all the actions appropriately.
Related Readings
References
- What is a checking account – Bank rate
https://www.bankrate.com/banking/checking/best-checking-accounts/#what-is-a-checking-account - Best checking accounts of November
https://www.bankrate.com/banking/checking/best-checking-accounts/ - Checking Account Fees In 2021 Remain Costly: How to Avoid Them, Forbes Advisor- https://www.forbes.com/advisor/banking/checking-account-fees-survey/
- Best bank account bonuses – bank rate
https://www.bankrate.com/banking/best-bank-account-bonuses/
I am a finance enthusiast who writes well-researched articles and blogs on business analysis, the financial service industry, and marketing analytics. My writings result from accurate market data and the application of my profound theoretical knowledge about business.