A current account, also known as a demand deposit account, is a type of bank account that allows you to deposit your money in a bank for an undefined period of time and gives you the provision to deposit and withdraw the money at any time without prior notice.
What are the Common Features of a Current Bank Account?
- Transactions: The current account is suitable for individuals, firms, companies or organizations that require frequent money transfers in their day-to-day activities.
- Minimum balance: Most current bank accounts have and insist on maintaining a minimum balance at all times. Most times, if one goes below the minimum balance they are charged a penalty fee.
- Interest: Most current accounts do not earn interest and if they do the amount is quite modest.
- Ledger or Maintenance Fees: Most banks apply service charges on their current accounts known as ledger or maintenance fees.
- Cheque books and Debit Cards: Most current accounts come with cheque books and debit cards that ease transactions for the account owner and enable one to access their funds at all times.
- Overdraft: With this, a current accounts allows you to withdraw more than what is available in your current account, but subject to a certain amount. The bank also charges additional interest on the overdraft amount because it is a form of short-term borrowing.
- Maturity: Current accounts do not have any maturity or end dates.
Current accounts are considered most suitable for business entities, companies, organizations or business people, who are most in need of frequent monetary transactions. If an individual intends to save money for a considerable while and earn interest on it for the purposes of future investments, then opening a savings account would be more desirable and convenient.
An important thing to note is that owing to their transactional flexibility, current accounts often appear on credit reports because they are considered part of your credit profile. The way you manage your current account is often a reflection of your general credit worthiness.
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