The vast majority of individuals use current accounts, which often come equipped with essential features such as debit cards and overdraft protection. In this comprehensive guide, we’ll go over the many types of checking accounts, break down the fees and charges associated with each, and highlight important factors to consider when making your choice.
How to use checking accounts
With a current account, you can easily withdraw money in different ways. Among other things, you can:
- Write a cheque.
- Use a debit card linked to your account to make transactions.
- You can use your bank card to make withdrawals and deposits.
- Please use the services of your neighborhood branch when making deposits or withdrawals.
- Make a one-time payment or set up automatic deductions using the bank’s online bill payment service.
- Create an automated payment schedule with your utility and credit card providers.
- Exchange money between multiple accounts.
Before opening a checking account, you should familiarize yourself with the many types of checking accounts as well as the day-to-day maintenance tasks associated with checking accounts. These tasks include learning how to write a check and maintaining a positive balance in the account.
Variety of checking account access methods
For regular cash withdrawals, you can use one of the following access options with your checking account:
- Host branch
If you need to withdraw money, make a deposit, or get help with any other aspect of your finances, you can do all of these things and more at the branch that serves as your primary location. . Even if the transaction takes place in a traditional bank branch, it is conceivable that a charge could be imposed if the transaction amount is higher than the predetermined limit.
- Check the installation
The check writing feature of a checking account is a tried and true method that has been around for a long time. Even if online banking has made many old means of payment obsolete, a large number of individuals still favor the use of checks.
- ticket vending machines
If you need cash but don’t feel like going to a bank, you can get it at any ATM in your area. After the bank offices have closed for the day, you may still be able to withdraw cash from an ATM; however, the amount of money you can withdraw will be limited.
- Online banking
Customers can perform a wide range of banking activities, such as transferring cash, clearing payments, checking account balances, etc., all from the comfort of their homes through the online banking service. Among these activities is the verification of account balances. It has quickly become one of the most popular methods of accessing a checking account because it allows you to do business anytime.
You can reorganize your account funds with the push of a button, eliminating the need to fill out paperwork or wait in line. However, if your online transfer amount exceeds the specified limit, you will need to submit it for verification.
- Telephone banking
Customers of even the smallest financial institution can meet various financial requirements by simply picking up the phone, calling the appropriate number and using the bank’s user-friendly telephone banking service. Telephone banking lets you track your transactions, send and receive payments, and see how much money you have in your account.
Types of checking accounts
The first thing you need to do to discover the checking account that meets all your criteria is to choose the best checking account available from the many that are offered today.
- Standard current accounts
Simple and basic, a checking account comes with a checkbook, debit card and, often, overdraft capacity in one form or another. Even though interest rates and costs for standard checking accounts can vary widely from bank to bank, you can generally expect to pay no more than the minimum each month and not incur any additional expenses.
- Basic bank accounts
Basic bank accounts are a great alternative for customers who have no credit history or a very limited credit history since they are identical to regular bank accounts, but they offer fewer features. They offer the same features as a standard checking account, but you won’t be able to write checks with them and you won’t be able to go over your limit.
- Student accounts
It doesn’t matter if you are a freshman, a graduate student, or enrolled in a program that is the educational equivalent of a bachelor’s degree; you may be eligible for a checking account specially designed for students. Student bank accounts offer a variety of benefits, two of which are interest-free overdrafts and free train tickets. Other benefits include cash back and other rewards.
- Youth Accounts
Focus on youth demographics Available at most top-tier financial institutions, youth accounts are essentially feature-limited versions of regular checking accounts.
- Premium or packaged accounts
You can get free breakdown coverage and a Netflix subscription, among other benefits, if you’re willing to pay a monthly fee for your existing account. The value of these accounts depends on the retail price of the additional features and the likelihood that you will use them.
Documents required to open a current account
To create a current account, you will need to provide the following information to your financial institution:
- Personal identification number card
- Credible proof of where you live
- Certificates of Incorporation and Memoranda of Association are required of corporations and trusts respectively.
- As part of a partnership business, a partnership agreement
- All partners must provide valid photo ID and proof of current address.
- A color photo of the applicant(s)
- Funds transferred from an existing savings account
- Contact address.
Please ensure that the date of submission matches the validity date of the KYC documents you provide.
Fees associated with current accounts
There are a number of potential additional costs associated with using your current account on top of the monthly premium account price.
- Foreign transaction fees incurred when purchasing or withdrawing with the linked debit card,
- Penalties for bounced payments, checks or direct debits due to insufficient money and interest on your overdraft or illegal overdraft.
Each of the following services from your bank will undoubtedly incur fees:
- Bank references
- Bank drafts
- Duplicate bank statements
Contact your financial institution or review your checking account documents if you need a detailed explanation of the fees charged to them.
Things to consider when choosing a checking account
When choosing a checking account, it’s essential to first consider how you will use it and whether a more specialized account, such as a student checking account, might better suit your needs.
- Determine whether or not you will need overdraft capability and any premium account add-ons.
- How often you travel is also relevant, as different accounts offer different benefits to those who travel often. Bank accounts that do not include additional fees for making international withdrawals or that include travel insurance in their standard package are two examples.
- Think about how often you’ll need to visit the bank, whether you prefer the option to reach someone at all hours, and the obvious question of how close the branch is to your home.
Current accounts and interest
The AER is the measure used to express the interest rate on a savings account over the course of a year.
Several high-interest checking accounts are available, but they often require a minimum monthly or annual deposit to earn income.
When opening a checking account, they will often present you with two rates, or annual percentage rates (APR):
- Interest accrued on your balance earns you
- the interest on an overdraft costs you one.
Who offers current accounts?
You can open checking accounts at traditional financial institutions such as banks and building societies; however, customers also have the option of opening accounts at non-traditional financial institutions such as online-only banks, credit unions, and even the postal service.
As a direct result of the restricted financial opportunities being made available to people with poor credit through more traditional channels, a number of small businesses have sprung up to fill the void left by their absence.
Current accounts are offered to consumers by banks linked to religious organizations as well as by foreign national banks present in the financial services market.
When you start your business for the first time, one of the essential steps that you absolutely must take is to open a checking account. It is crucial for you to keep your personal banking activities and business banking activities separate from each other. When you have a checking account for your business, it is much easier to keep track of all of your business expenses, which, in turn, simplifies the tax filing process.