What are Current Accounts?

Current accounts are cheque operated bank accounts maintained for mainly business purposes. Unlike savings bank accounts, no limits are fixed by banks on the number of transactions permitted in the account. Banks generally insist on a higher minimum balance to be maintained in current account. Considering the large number of transactions in the account and volatile nature of balances maintained overnight banks generally levy certain service charges for operating a Current account.

Current Account is primarily meant for businessmen, firms, companies, and public enterprises etc. that have numerous daily banking transactions. In a Current Account, a customer can deposit any amount of money any number of times. He can also withdraw any amount as many times as he wants, as long as he has funds to his credit.

Current account holders can enjoy regular financial instruments like cheque books, bank statements and ATM cards. However, these accounts won’t have any transaction limits as in savings bank accounts.

A current account also comes with overdraft facility, which allows you to borrow money from bank and pay interest only for the time you use the money. However, each current account has imposed limits up to which a customer can take overdraft.

These business accounts are meant neither for the purpose of earning interest nor for the purpose of savings, but for convenience of the business; hence they do not bear interest. Instead, a customer can deposit or withdraw any amount of money any number of times, subject to availability of funds. However, legal heirs of a deceased person are paid interest at the rates applicable to Savings bank deposit from the date of death of the account holder till the date of settlement.

In USA, current accounts are called checking accounts. Because money is available on demand these accounts are also referred to as demand accounts or demand deposit accounts in certain countries.