If you’re new to the world of banking, opening a current account can be a little intimidating. After all, it’s your first ever bank account and there are so many different things you need to know and understand before you sign on the dotted line.
That being said, opening a bank account is actually pretty simple – particularly if you know what you’re doing and what you’re getting yourself into from the word go. In this blog post, we will explore everything you need to know about opening a current account; from what it means, the different types of current accounts available to you as an individual or business and how to go about doing so in the most beneficial way for your own personal circumstances.
What is a current account?
A current account is an account that you can use to deposit and withdraw funds. It is similar to a savings account in that you can deposit and withdraw funds, but a current account is an account that you can use to pay bills and receive salary payments. It is also sometimes referred to as a “transactional account”.
A current account enables you to pay bills and transfer money to other people. You can also withdraw money from ATMs or make payments by debit card. Many account holders also have access to internet banking, which allows them to monitor account activity, pay bills, and transfer funds between accounts. Banks offer different types of current accounts, which you can compare and choose from.
Types of Current Accounts
A current account is essentially a savings and/or transaction account where you can store and/or withdraw your money. There are different types of current accounts available to individuals and businesses and it is important to know what each of these types entail in order to open the right account for you and your specific needs.
Here are some of the most common types of current accounts: –
Savings or Deposit Accounts – You can store your money in a savings account and get a higher interest rate on your savings. You can also withdraw your money whenever you need it. But make sure to pay attention to the terms and conditions, because there are certain times of the year when you can’t withdraw your money. Transaction accounts – A transaction account is a basic account for everyday banking. It’s suitable for people who want to make a lot of transactions, like making payments or withdrawing cash. The account may also have a monthly fee.
Checking accounts – A checking account is best suited for people who use checks regularly. A monthly fee is usually charged for the account. The amount you can withdraw depends on how much money you keep in your account.
Why Should You Open a Current Account?
The first and most obvious reason you should open a current account is because you need one for your day-to-day life. Whether that be for paying bills, transferring money to other people, withdrawing cash, or for online shopping – you will need a current account and shouldn’t open one unless it is a real and necessary need.
If you’re currently operating on cash and cheques, this will create a lot more work for you and you will need to keep track of everything manually. A current account will help to streamline your life and make it that little bit easier.
If you’re planning on expanding your business, a current account will help you to pay suppliers, employees, and taxes – and it will also help you to receive payments from customers. A current account can also help you to manage your cash flow and forecast when you will receive funds.
How to Find the Right Bank for You
When you are choosing a current account, you should think about what kind of bank you want.
- Do you want to use an online or mobile app?
- Do you want an account that offers advice and guidance?
- Do you want an account that will let you make penalty-free withdrawals from another bank’s ATMs?
You should also keep in mind: –
- What is the minimum balance you will need to keep in your account?
- What is the monthly fee?
- What are the interest rates?
- What are the requirements for accessing the overdraft?
- What are the online banking features?
- Will you be able to move your direct debits and standing orders?
Important Things to Know Before Opening a Current Account
- You will be required to show ID when you open your account. This is so the bank is able to confirm that you are who you say you are and are able to access the account.
- You will need to decide whether you want an account with a branch or an account with only online banking. If you opt for an account with only online banking, make sure you have easy and quick access to the internet.
- Payment dates for bills are usually short. Make sure you open your current account just before you will need it.
- Be careful about when you go and open your account. If you open it just before a holiday or the weekend, the bank might not be able to process your application immediately.
- When you open your account, make sure you shop around and compare different banks.
Documents Required for Opening a Current Account
Before you open a current account, you will be required to provide certain documents to your bank as evidence that you are who you say you are. This is to ensure that your account is only used by you and that no one else has access to your funds. The specific documents your bank will require will vary depending on your circumstances. However, these three documents are the most common and are required by just about every bank out there:-
- Proof of Identity: This is pretty much exactly what it sounds like – you will be required to show your bank some form of identification (e.g. a driving license or passport) that proves your identity and that you are who you say you are.
- Proof of Address: You will also be required to show your bank proof of where you live. This can be done by supplying one of the following documents.
- Utility bill: This can be a gas, water or electricity bill and must be in your name.
- Mortgage contract: This must be in your name.
- Bank statement: This must be in your name.
- Phone or cable bill: This must be in your name.
- Medical or health insurance bill: This must be in your name.
- Proof of Income: Your bank will require you to supply them with evidence of your income. This can be done by supplying one of the following documents:-
- In-date payslip: This must show your name, address and income. Last but not least, if you are signing up for a business account, your bank will also require you to sign a verified copy of your company’s articles of incorporation.
Opening a current account is an important step in your financial journey. It can help you to organize your finances, plan for the future, and will hopefully make your day-to-day life a little easier and more streamlined as a result. However, it is important to do your research and know exactly what you are getting yourself into before doing so.
You will need to decide what type of account is best for your needs, and you will need to find the right bank for you. In the end, opening a current account can be a very beneficial and helpful step in your financial journey.