Current account is opened by businessmen, having a higher number of regular business transactions. The transactions include deposits, withdrawals, and contra transactions. It is also known as Demand Deposit Account.
Current accounts can be opened in co-operative societies as well as in other commercial banks. In current account, one can deposit and withdraw at any moment of time without any prior notice. Current account is used for making the payments for creditors through cheques. Cheques received from customers can be deposited in this current account for collection.
Current account customers will get an advantage of overdraft facility.
Characteristics of Current Account
The important characteristics of current account are:
- Current accounts are meant to run a business
- Current Account is a non-interest-bearing account to the holders.
- It requires high minimum balance to be maintained contrast to savings account.
- Penalty will be imposed if minimum balance is not maintained in the current account.
- Current account enables the businessmen to run their business transactions without any hassle.
Advantages of Current Account
The advantages of current account are:
- Current account is mostly operated by businessmen i.e., proprietors, partnership firms, public and private companies, trust, association of persons, etc. who has a greater number of daily banking transactions, i.e., receipts and/or payments.
- It allows the businessmen to conduct their business transactions smoothly.
- The businessmen can remove from their current accounts without any limit, by following banking cash transaction tax, if any levied by the government.
- Home branch is one that opens his/her account. One can deposit money to his/her current account in the home branch without any restrictions. However, the current account holder can deposit the cash from any other by paying a minimum charge as applicable.
A savings account is a basic type of account which lets you to deposit money, keep it safe, and withdraw funds, all these can be possible while earning interest.
Savings accounts are being offered by credit societies, and many other financial institutions, and naturally pay interest on your deposits. Some other financial institutions will pay higher interest rates than the others.
Advantages of Savings Account:
- Contrast to a current account, a savings account earns interest.
- The balance earned in a Savings Account aids towards individual’s income.
- Some societies offer more interest rates for maintaining a higher balance, while some offer sweep in facility that helps earn higher interest income.
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