Using current account

A current account is a financial account with a bank or financial institution. It enables the holders to make or receive unlimited number of payments as frequently as they wish. Thus, current accounts are considered as an essential tool for businessmen, according to http://www.economywatch.com.

Employers often transfer wages directly into the workers’ current accounts. Current accounts provide the facility to make direct payments for bills, rent and mortgages. There are two ways in which a current account holder can do this:

Standing Order: If one instructs the bank in which he/she holds a current account to make a monthly payment of a fixed amount to a particular person, it is known as a standing order. Account holders can also change the amount by intimating the financial institution of the desire to do so.

Direct Debit: When customers instruct their banks to pay an amount that is not fixed to a particular person, it is known as a direct debit. The party that has to withdraw the money can do so by informing the account holder.

Holding a current account has the following advantages: Faster and trouble-free access to cash, electronic payment, cheque book facility for non-cash payments, overdraft facility, and management of usual payments like wages and expenses.

Others are online management of money, no need to carry cash in bulk and provision of statement under money management facility.

Drawbacks of current account include: Services of package accounts have additional costs, fine print and paperwork can be lengthy and perplexing, corporate businesses can be charged huge fees, losing the card can restrict one’s access to cash, a limit may be imposed on the amount of funds one can withdraw in a day; when opting for a current account, one should aim at getting competitive interest rates, low interest overdrafts and preferential offers on loans.