Have you ever wondered what the difference between a current account and a savings account was? Well, you need not wonder anymore. Here’s all you need to know.
The first thing you want to understand is, current accounts help enable frequent and regular transactions, and they’re mostly used by public enterprises, firms, businessmen and women, organizations and companies.
You can do all sorts with this type of account, from withdrawals to deposits to contra transactions. This type of bank account is also popularly known as the Demand Deposit Account.
You can open one in any commercial bank around you. Note that current accounts are zero-accounts and they don’t earn any interest because of the flexibility the accounts offer. You can check out this post for some of the major functions of commercial banks in Nigeria.
The account, however, has some mouth-watering advantages, and we have them listed below:
Advantages of a Current Account
1. If you’re a business owner, a businessman, or you run a firm amongst other related things, a current account is the best idea for you as it allows its users to handle large payments at a go.
2. It lets you withdraw without limit and levied cash transaction payments.
3. No restrictions are on deposits put into this account.
4. For direct payments to creditors, it’s easy to issue a check, demand-draft, or a pay-order via a current account.
5. They are recommended for managing day-to-day transactions.
6. There’s an option for overdraft facilities for holders of this account.
7. Small interest earnings are regularly put on account balances.
8. You can transfer funds to multiple locations. This is particularly useful for those who engage in international business.
9. You can withdraw or deposit money at any location.
10. Current accounts offer a load of benefits to businesses; benefits such as the multi-location transfer and deposits and withdrawals at any location as pre-mentioned, but there is also the free inward remittance.
11. Because of the interbank connection, creditors of a current account holder get assistance when it comes to accessing the information on the worthiness of the account holder’s credit.
12. It enables the industrial progress of the country.
13. Without the current account, businessmen and women will face a lot of challenges when it comes to their business transactions.
14. Internet banking and mobile banking will allow businessmen and women to go about their crucial business transactions efficiently and effectively.
Does a current account have any disadvantages? Sure, it does!
Disadvantages of a Current Account
1. Holding a current account comes with a lot of paperwork which is said to be confusing as well as lengthy.
2. The bank collects enormous fees because of the significant business transactions.
3. Because of the opportunity cost it threatens, you might lose on the interest rates because of the zero or low interest depending on the moment money in the account.
4. An operational burden is attached to the account since there are additional costs on the package the accounts offer.
Maintaining a current account can be quite helpful as well as complicated. However, make sure you understand the terms and conditions of the bank before opening a current account.
You can also consider having a contact of your account officer to help you whenever the need arises