What is meant by a Current Account?
Current bank accounts are really famous and significant for organisations, companies, public enterprises, and beyond who usually deal with a massive amount of daily transactions. Just like the savings account, the current account involves withdrawals and deposits. However, it has a larger limit of transactions.
Today, a current account can be opened at any commercial bank. Mostly, to lure individuals and companies, the banks have started offering various schemes and offers. You can go ahead with the bank you think is most suitable for your business.
Due to the fluidity offered by current accounts, make sure to note that you won’t get any interest on the money you have deposited. However, you can do any amount of transactions with this kind of account.
What are the advantages of a current account?
- The prime reason for the establishment of the current account is that they allow a significant volume of payments – deposits and withdraws, unlike the savings account.
- Countless withdrawals are permitted in accordance with the cash transaction fees. However, there are no limitations on the deposits made at the bank’s home branch. Individuals can also make cash deposits at other branches with meagre transaction fees.
- To make seamless direct payments to the creditors, current accounts offer cheques, pay orders, and demand drafts to you. Currently, some current accounts offer small interest earnings on the deposits made. This makes the current account more beneficial.
- Your companies and organisations are offered other perks like free inward remittances, multi-location transfers, easy and seamless deposits and withdrawals at a location closer to you.
- Furthermore, there are no limitations for you to withdraw from your current account. However, you need to know that cash transaction tax is applied by the government on the amount.
- Creditors can assess your creditworthiness as a current account holder through connections. You can make thorough use of Internet banking and mobile banking to make transactions faster and smoother.
- You can also enjoy depositing and withdrawing cash from any location and benefit from multi-location fund transfers.
What are the disadvantages of having a current account?
- Due to the fluid nature of the account, you don’t get decent interest rates. Thus, you lose out on a chance of gaining interest.
- Operationally, these accounts charge higher costs than a normal savings account.
- The paperwork involved is lengthy and tiresome. You must go through a lengthy KYC procedure. There are a huge amount of fees involved in business transactions.
- You need to maintain significantly more minimum balance than a savings account.
- If you ever have your account in a negative balance, then a lot of charges might be levied as penalties. Thus, be careful that your account isn’t in a negative balance.
So, hope you have learned the advantages and disadvantages of the current account. You can now make a wise decision before opening your current account!
