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Home Articles The Different Types of Checking Accounts

The Different Types of Checking Accounts

IndianMoney.com Research Team | Updated On Friday, September 20,2019, 05:54 PM

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The Different Types of Checking Accounts

 

 

While choosing the best current account for your business, you might have come across various types of current accounts offered by banks. Knowing the various types of current accounts and their features is important if you want to make sure you get the best current account in the market.

What is a Checking Account?

A checking account refers to a current bank account which is opened by people who conduct a higher number of transactions with the bank on a regular basis. It is offered to individuals who need to access their accounts frequently. Current accounts relate to liquid deposits and it offers a broad range of customized options to aid financial dealings like withdrawals, deposits, contra transactions, payment through cheque and overdraft facility etc. Though these accounts do not provide interest and requires a higher minimum balance, they give your business a professional edge. The current accounts are crafted to suit the requirements of regular businesses, large corporate, importers and exporters and even industries.

See Also: What are the Different Types of Bank Accounts?

Features of current bank accounts:

Some of the key features of checking accounts are as follows:

  • Current accounts are mainly provided to businessman like proprietors, business firm, private and public companies and allow them to operate business smoothly
  • It is a non-interest bearing account and needs a higher minimum balance to be maintained as compared to a savings account
  • This type of account is custom made to facilitate business transactions via different channels like conducting direct operation at home branch, electronic transfer, cheque facility and wire transfer.
  • It allows the account holder to borrow money up to an agreed limit known as an overdraft facility and interest is charged against the short-term funds borrowed.
  • There are no restrictions on the number of withdrawals or the number of deposits that can be made as long as the minimum balance is maintained
  • A penalty is charged if the minimum balance is not maintained in the current account.
  • Current account can also be operated offline as well as online through internet and mobile banking facilities.
  • The current account facilitates prompt and frequent business transactions.
  • The customer must complete the KYC norms while opening the current account.
  • Current accounts can be opened in co-operatives banks as well as commercial banks.

See Also: Which Type of Bank Account is Best For Your Money?

Types of checking accounts:

Banks offer several types of current account to businessmen and traders to ease business operation and fulfil the business transaction requirements. If you for a current account then you must have complete knowledge about the nature of transactions you wish to carry. Here are some of the common types of current account offered by the banks in India:

Regular Checking Accounts:

The regular checking account lets you access all the facilities that you expect from a current account. It is the most basic form of current account where you need to maintain a minimum balance as prescribed by your bank.

It is a non-interest bearing current account that deducts a fee if the stipulated minimum balance is not maintained. Using a regular checking account you can deposit and withdraw money, make transactions using cheques, debit cards, get cash from ATM and avail the overdraft facility.

Some of the features of standard checking accounts are as follows:

  • It is suitable for all types of customers
  • ECS,NEFT and RTGS facilities are available
  • Free ATM and debit card facility
  • Multicity cheque facility and intercity transfers
  • Nomination facility and overdraft facility
  • Internet and mobile banking facilities.

In India, all commercial banks offer regular checking account facility.  These accounts can be opened at Co-operatives banks as well.

See Also: 5 Types Of Bank Accounts : All You Need To Know

Premium Checking Accounts:

If you have a five-figure sum or more then premium checking account is the right choice for you. Premium checking accounts come with exclusive offers and benefits for the accountholder. These accounts are known to provide several customised features and are mainly suited for individuals and business person who carry out huge financial transactions.

In India, premium current accounts are offered by several banks. The ICICI bank offers a premium category of current accounts that offers free cash deposits up to Rs. 5 lakh. You must maintain a minimum monthly balance of R.s 50,000. The account comes with free RTGS and NEFT transactions as well.

The Indian bank premium current account comes with the sweep facility. The minimum quarterly balance required to be maintained is Rs. 1 lakh and the threshold limit is Rs. 2 lakh. The sweep facility will be effective only if the balance exceeds the threshold limit. The account comes with a host of other benefits and this type of account is suited for business enterprises and corporations

Checking Accounts That Pay Interest:

An interest-bearing checking account allows you to earn interest on your deposits just like a savings account. This is a new facility where some banks provide a minimal interest on the current account balance. Bank often have some minimum requirements for these accounts, so to qualify for these types of account you must meet the specific requirements like average daily balance, a direct deposit requirement or debit card usage criterion.

In India, banks do not provide interest on current account balance. But some banks provide the sweep facility that enables the current account holders to earn interest above a threshold limit. Some of the banks providing the sweep facility are Bank of Baroda, Indian Bank etc.

Low-Balance Checking Accounts:

Current accounts generally have high minimum balance requirements for the maintenance of the accounts. The low balance checking accounts refer to bank accounts where you can maintain a low minimum balance and still use the current account facilities. There are certain restrictions on these types of current accounts. You are not allowed to write an unlimited number of cheques. Other restrictions include no overdraft facility or restricted usage of debit cards. The new start-up current account at ICICI bank and the local current account at Axis Bank are the best checking accounts that offer the option of low balance current account. These accounts come with very low annual maintenance charges and have very low minimum account balance requirement.

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