Types of Current Accounts: Features, Uses & Benefits

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Opening a current account can be beneficial for you if you are looking for liquidity. It is an excellent option to manage the financial operations when running a business or an enterprise. You can open a current account with most banks, which does not require a long, drawn-out process to complete.

Nowadays, banks offer various types of current accounts catering to varying needs. For an effective and cost-efficient banking experience, choosing the right current account is key. These accounts not only help in carrying out day-to-day transactions but also provide a wide range of benefits.

Different Types of Current Accounts

The following are some of the major types of current accounts and how they operate:

1. Standard Current Accounts

These are some of the most common current accounts available. In this type of account, you need to maintain a specified minimum monthly average balance. Furthermore, standard current accounts do not necessarily provide any interest on the deposits. They provide benefits such as debit cards, overdrafts, internet banking, chequebooks, and more.

2. Packaged Current Accounts

This type of current account features more benefits than the standard current account. These include rewards, insurance policies, medical support, roadside assistance, and more. Most packaged current accounts usually come with a monthly fee and other related charges.

3. Premium Current Accounts

These are more suitable for entities that conduct large volumes of transactions of higher values. These include businesspersons, entrepreneurs, traders, corporates, and High Net-worth Individuals (HNIs).

These offer features and benefits that are customised to specific needs and requirements. These benefits help conduct all transactions smoothly and seamlessly, without delays.

4. Foreign Currency Accounts

Such accounts are ideal for Non-Resident Indians (NRIs) or residents who want to transact often in foreign currency. It helps store funds in foreign currencies and conduct transactions through them accordingly.

It supports various currencies such as USD, Euro, GBP, JPY, and CAD, among others. These accounts may also allow you to earn interest on your deposits. However, they are not covered by the national deposit insurance schemes.

5. Cash Management Current Accounts

A Cash Management Account (CMA) is a type of current account that combines various features. You enjoy the benefits of checking, savings, and investment accounts in a single account. These offer debit cards, cheque facilities, and unlimited transactions, giving you easy access to money.

6. Single Column Cash Book

These accounts provide only a few basic features of a current account. However, their primary purpose is to help provide a space to track and manage your day-to-day transactions. They do it via two separate columns: debit and credit of finance.

It is important to note that only cash-pertaining transactions are recorded in this account. Transactions related to cheques issued/received or purchase/sale discounts are not recorded.

Major Differences Between Various Current Account Types

Below mentioned are some of the differences between the different types of current accounts:

Particulars	Standard	Packaged	Premium	Foreign
Objective	Allows frequent financial transactions for various business-related purposes	Ensures added benefits over standard CAs	To cater to businesses with high volumes of transactions, and can be customised to their requirements	Permits resident Indians or NRIs to store foreign currency funds in such accounts
Suitable For	All individuals	Medium-sized businesses or enterprises	Large-scale businesses or enterprises	Indian residents who want to transact in foreign currencies and NRIs
Benefits Included	Chequebooks, debit cards, Internet banking, etc.	Various rewards, insurance policies, roadside assistance, medical support, etc	Customised features/benefits as per requirements for smooth transactions	Allows storage of various currencies, including USD, Euro, GBP, JPY, and CAD, among others
Maintenance Fees/ Other Charges	Predetermined minimum monthly average balance to be maintained	Monthly fees and other charges can be applicable	Predetermined minimum monthly average balance to be maintained	Foreign exchange transaction charges are applicable
Drawbacks	Provide little to no interest rates on deposits	Extra charges can make packaged accounts expensive and not worth the benefits	The minimum monthly average balance to be maintained can be quite high in such accounts	High-interest rates on transactions can make it quite expensive to use often

Who can be eligible for a current account?

You can open a current account if you fall under the categories of people/entities qualified as per the bank’s terms. You need to choose as per your category, such as individuals, sole proprietors, partnership firms, HUFs, or companies.

Can current accounts be taxable?

No, since current accounts usually provide zero interest on the deposited amount, they do not charge any taxes. This makes using them highly ideal for businesses and enterprises.

Can I use a current account for personal use?

It is not recommended to use a current account for personal use, since these majorly cater to businesses or enterprises’ needs. Individuals can make use of savings accounts for all their personal banking requirements.

What is the difference between a savings account and a current account?

A savings account is suitable for salaried employees or those who have a monthly income. On the other hand, a current account could be ideal for companies and businesses that need to access and transfer funds frequently.

Is it mandatory to maintain a minimum balance in a current account?

This depends on the bank and the type of account you choose. Banks generally need you to maintain a minimum amount in current accounts within a quarter or month.

Types of Current Accounts