If you visit a bank, you will notice they have different counters. Each counter or dedicated department caters to different people’s needs to ease their banking experience. Similarly, in India, there are 4 different types of bank accounts. They are savings, current, fixed deposits, and recurring accounts. Each of them serves a specific audience and employs distinct guidelines to safeguard and responsibly handle your earned funds.
Individuals commonly favour savings accounts. However, there’s another type of account known as the current account, which enjoys widespread usage in the business sector. Let’s delve deeper into what a current account is and explore what are current account benefits.
What is a Current Account?
A Current Account is a banking account tailored for businesses, specifically designed to support enterprises of various scales, particularly when there is a high volume of daily transactions. While a savings account primarily serves the purpose of individual savings and investments, a Current Account serves a similar objective but is geared toward facilitating and enhancing business operations. Continue reading to learn more about the current account benefits.
What are the Advantages of a Current Account?
Here, we have listed the main current account benefits:
1. Easy Management of Business Finances
One of the major benefits of a current account is that it serves as an excellent tool for businesses to manage their finances effectively and systematically. It comes equipped with a range of features, such as cheque books, overdraft options, and online banking, that streamline the handling of routine transactions. With these capabilities, businesses can efficiently oversee their cash flow, execute vendor payments, and receive customer payments.
2.Never Run Out of Cheque Leaves
Recall the occasion when you first opened a savings account. Typically, your bank would have provided you with a yearly supply of check leaves. When you exhausted these leaves, you had to return to the bank and pay for a new check-book.
One of the many benefits of having current account is the generous allocation of check leaves. As a current account holder, you receive a fixed number of checks each month at no additional cost. This implies that you receive a fresh cheque book every month, eliminating the inconvenience of running out of checks and enabling smooth transactions.
3.Transact Limitlessly
Among all the other advantages of the current account, the imposition of transaction limits becomes impractical. One of the fundamental benefits of current account lies in the absence of transaction constraints. This manifests in two key ways:
- There are no limitations on the transaction amount.
- You have the freedom to execute an unlimited number of transactions each month through various methods, be it online transfers, checks, demand drafts, pay orders, or cash.
4.Overdraft Facility
In situations of urgency or immediate financial requirements, the bank offers the option of accessing short-term loans, known as a Bank Overdraft. This facility proves highly beneficial for numerous small and medium-sized businesses or enterprises whenever the need arises.
5.Convenient Banking
While some of the services provided by Current Accounts may resemble those offered by Personal Savings accounts, it’s the unique selling points (USPs), such as 24/7 phone banking, doorstep banking, and mobile alert services, that are distinct to Current Accounts.
Additionally, because banks do not need to pay interest to Current Account holders, they often go the extra mile to make their offerings more enticing and provide maximum benefits to maintain the account holder’s business.
Top Features of Current Account
Below, we present a compilation of the key attributes of a Current Account. Let’s explore them.
1.Instant Access
A Current Account offers round-the-clock access to funds, allowing customers to conduct payments, deposits, and withdrawals whenever necessary. There are also various benefits of having a current account that you must know about.
2.Overdraft Facility
A Current Account provides an overdraft facility that permits customers to withdraw funds exceeding their account balance up to a pre-arranged limit.
3.Direct Debits/Standing Orders
Customers have the option to establish direct debits or standing orders, enabling automatic, scheduled payments to be made from their current accounts, sparing them from the need to initiate each transaction manually.
4.Online Banking
The majority of current accounts provide online banking services, allowing customers to conveniently monitor their balances, review transaction history, initiate payments, and transfer funds from anywhere across the globe. The benefits of having a current account are also vast.
5.Mobile Banking
Numerous banks have embraced mobile banking, granting customers the flexibility to perform payments and access their account balances while on the move.
6.Multi-Currency Accounts
Certain banks provide multi-currency current accounts, allowing customers to maintain various currencies within a single account and switch between them as needed.
Conclusion
To sum up with the current account benefits , India presently occupies a leading position in the startup landscape, with numerous businesses emerging. Consequently, major banks are vying to attract their business. These banks have chosen to align themselves with the Make in India initiatives, particularly emphasizing the MSMEs and the rural sector, which were not their primary areas of focus previously.
This development has fostered robust competition among major banking institutions, leading to the introduction of attractive schemes and features for their respective Current Accounts. Ultimately, the choice rests with the potential account holder, who must select the one that will best serve their business interests in the long run. We hope you’ve got all your answers to what are the benefits of a current account.
FAQs on Benefits of Current Account
Is it good to keep money in the current account?
A savings account is well-suited for individuals with regular monthly income, such as salaried employees. In contrast, traders and entrepreneurs can reap the advantages of current account who require frequent access to their accounts.
Is there any tax on the current account?
Even for sizeable enterprises, a Current Account is indispensable. Additionally, it’s important to note that a Current Account is a non-interest-bearing account. Moreover, there are no taxes levied on it.
What is the minimum limit for a current account?
Banks mandate that Current Account holders maintain a minimum average balance (MAB) within a quarter or month. Nevertheless, the specific MAB requirement can differ depending on the type of Current Account product.