Which type of account —a checking account or current account—is best for you if you’re new to banking? However, did you know that a checking and a current account are synonymous with each other in many ways?
A checking account is sometimes known as a current account or a transactional account. One or more individuals at a financial institution have this type of deposit account, which offers a comprehensive banking solution. Even though a checking and current account have various similarities, there are a few subtle differences between the two. This post will highlight these differences between checking account vs current account to help understand their function better.
What is a Checking Account?
A checking account is an account that permits both deposits and withdrawals of funds. Writing a cheque was the traditional way to withdraw money. It is only a document giving instructions to the bank on how and to whom they must withdraw the money. Since people could mail the cheque along with the bill, this used to be the norm for individuals to pay their bills. You might alternatively use a cheque when purchasing or making payments for products and services.
Nowadays, individuals hardly use cheques. Many banks have opted to remove them completely in preference for EFTPOS terminals (Electronic Funds Transfer at Point Of Sale) and online banking transfers that allow you to send funds from your account to your intended recipient’s account.
What is a Current Account?
Nowadays, the current account closely resembles a checking account in that it serves as a financial management tool. It’s designed for accepting deposits and offering various withdrawal options. Account holders are provided with a debit card that facilitates cash withdrawals from ATMs (Automatic Teller Machines) and enables EFTPOS payments when making purchases.
Additionally, you can conveniently conduct online shopping using your debit card information, digital payment wallets, or by initiating direct fund transfers through Internet banking. Continue reading to learn about the difference between checking account and current account.
Checking Account vs Current Account
The terms checking account and current account can be used interchangeably as they both describe the same type of bank account. In the United Kingdom, the term “Current Account” is more prevalent, whereas in the United States, “Checking Account” is the more commonly used terminology.
Both checking account and current account types generally provide similar functionalities, including the capability to deposit and withdraw funds, write checks, make purchases using a debit card, and potentially earn interest or incur fees depending on specific conditions. As a result, there is no substantial distinction between the two terms regarding the fundamental functions of the account.
Difference Between a Checking Account and a Current Account
Find the significant difference between checking account and current account below:
| Aspect | Checking Account | Current Account |
| Purpose | Primarily for personal use and day-to-day transactions. | Businesses and corporations typically use them for their financial operations. |
| Account Holder | Individuals or joint account holders typically hold them. | Businesses, organizations, or corporations usually hold them. |
| Minimum Balance | Some checking accounts may have a minimum balance requirement, but it’s often lower than current accounts. | Current accounts may have higher minimum balance requirements. |
| Interest Earnings | Usually, checking accounts offer minimal or no interest on the deposited funds. | Current accounts generally do not earn interest. |
| Overdraft Facilities | Checking accounts often offer overdraft protection to cover insufficient funds temporarily. | Current accounts may offer overdraft facilities, but they can be less common. |
| Usage Restrictions | Primarily for personal spending, bill payments, and daily expenses. | They are used for various business-related transactions, including payroll, supplier payments, etc. |
| Transaction Limits | Generally, there is a limit on the number of monthly transactions without fees. | Current accounts may have higher transaction limits or no limits for business purposes. |
| Account Fees | Some checking accounts may have monthly maintenance fees, but they are often waived with certain conditions. | Current accounts may have more significant fees, including transaction fees, account maintenance fees, etc. |
| Account Statements | Regular account statements are provided, typically on a monthly basis. | Current accounts may have more detailed statements, which are often needed for business accounting and auditing. |
| Chequebooks | Checking accounts typically come with chequebooks for making payments. | Current accounts may or may not include chequebooks; electronic payments are more common. |
| Accessibility | Checking accounts are generally accessible through ATMs, online banking, and mobile apps. | Current accounts also offer various access methods, including online banking, corporate banking services, etc. |
Conclusion
To sum up with the difference between checking account and current account, since checking accounts have become largely outdated, your bank will probably provide you with a current account. Engage in a conversation with your bank’s customer service team, as many institutions now present diverse packages associated with your current account. In most instances, they will customize a package to align with your unique requirements.
As previously highlighted, it’s nearly impractical to participate in society without a bank account. Nevertheless, the selection of the most suitable account for you hinges on your income and spending patterns.
FAQs on Checking Account vs. Current Account
What impact will a checking account have on the credit report?
The act of opening a checking account is unlikely to exert any substantial influence on the credit report. Nonetheless, maintaining a checking deposit may trigger a soft inquiry by the bank or financial institution for additional evaluation.
What are the characteristics of a checking account?
Key attributes of a checking account include facilitating bill payments for everyday expenses, enabling debit card transactions for purchases, and providing access to cash through ATMs. In essence, a checking account operates much like a current account and provides comparable features.
What types of checking accounts exist?
Various types of checking accounts include premium checking accounts, standard checking accounts, student checking accounts, business checking accounts, interest-earning accounts, senior checking accounts, and rewards checking accounts.