A current account is a type of deposit account, which is most famous for business purposes. They are generally used by companies, businessman, public enterprises, solely or jointly. Simply put, any entity with a high rate of heavy regular transactions can use current accounts to their benefit.
Unlike a savings account, there is no interest associated with a current account. In the new age of financial services, having an existing digital account has made business transactions much swifter and convenient. Customers can withdraw or deposit their money smoothly in a matter of moments.
A current account can be opened in most of the commercial banks in India. If you are planning to open an existing account, these are some of the crucial things you must know:
1. No Limit on Transactions
Current accounts are explicitly designed to make frequent transactions such as transferring funds, sending or receiving cheques more flexible and hassle-free. One of the most striking features of a current account is that there are no limits on the number of transactions made in a single day. This is a customer-friendly feature that facilitates quick and easy transactions. Customers can deposit or withdraw the amount at any given moment without providing notice.
2. Overdraft Facility for Customers
Another feature of the current account that can be valuable is the facility of overdraft. It means that the current account holder can overdraw the balance in his existing account temporarily to meet the fund requirements that may arise. The overdraft facility of a current account essentially enables short term borrowing from the bank.
Depending on the terms and conditions of the bank, there may or may not be interest levied on the overdrawn amount. In contrast to this, a regular savings account does not offer an overdraft facility to its customers. Therefore, in case of sudden financial needs, having a current digital account can be immensely useful.
3. Can Offer Creditworthiness
Your credit score is the record maintained by Credit Rating agencies on your past performance of repaying outstanding debts. In some cases, lenders and creditors may need to review your creditworthiness before loaning funds to you. If you have a current account, the process can be simplified considerably.
You can provide them with a bank-issued letter stating that you are a current account holder, or interbank connections can help check the creditworthiness.
4. Separates Business from Personal Finances
If you are a freelancer or an entrepreneur, it is crucial to keep your business expenses separate from personal finance. When you open a separate current account, it helps keep a record of the income and costs of the business. This helps create a distinction that enables you to estimate your financial standing more efficiently.
Not only does it help you to plan your finances better, but you can also map the financial projections for your business more accurately with a separate account holding the relevant information. It allows you to point at any point in time and determine the business income and expenses.
Alternately, suppose your personal and business finances are merged under one account. In that case, you may not be able to recognise the loss or profit trajectory well for your business if your financial health is good.
5. Convenient Banking Transactions
A Current Account provides the account holder certain added benefits which may not be available with a personal savings account. As the competition increases, customers can enjoy more value-added services from their banks at no additional cost. Practical features such as zero balance account, net banking, 24 hours phone banking, quick mobile alerts for transactions, etc., are making life easier for many of us.