A transaction account, also called a checking account, chequing account, current account, demand deposit account, or share account at credit unions, is a type of deposit account designed primarily for businesses, companies, and professionals who conduct a high volume of daily transactions. Unlike savings accounts, which encourage saving by offering interest, current accounts are intended for frequent and flexible transactions without limits on deposits and withdrawals. Here’s a detailed look at current accounts in India:
Key Features of a Current Account in Indian Banks
- Transaction Volume:
- Current accounts allow for unlimited deposits and withdrawals, making them ideal for businesses and professionals who require frequent access to funds for operational expenses, vendor payments, payroll, and other business transactions.
- Interest-Free Account:
- Most current accounts do not earn interest. Banks typically do not pay interest on the balance held in current accounts, as they are designed for transactional purposes, not savings.
- Minimum Balance Requirement:
- Current accounts often come with higher minimum balance requirements compared to savings accounts. Falling below the required balance may result in maintenance fees or penalties.
- Overdraft Facility:
- Many banks offer an overdraft facility for current account holders, allowing them to withdraw more than the available balance up to a certain limit. This can help businesses manage short-term cash flow needs.
- Chequebook and Debit Card:
- Banks issue chequebooks and debit cards for current account holders to facilitate transactions. Cheques are commonly used for business payments, while debit cards allow for direct account access.
- Additional Transaction Benefits:
- Current accounts may offer services like demand drafts, pay orders, and multi-city cheques. Many banks also provide online banking, mobile banking, and point-of-sale (POS) terminals for easy transactions.
- Monthly Fees and Service Charges:
- Since current accounts are intended for frequent business use, banks often apply monthly fees and service charges to cover transaction processing costs. Fees vary depending on the bank and the account’s transactional usage.
- No Withdrawal Restrictions:
- Unlike savings accounts, there are typically no restrictions on the number of withdrawals or transactions. However, excessive cash handling may incur additional charges in some banks.