| A current account is a service provided by banks and other financial institutions which allows bank clients - both individuals and businesses - to put money and take funds out from a bank account at any time. The terms of a current account may vary, but generally current account holders can use personal cheques in place of cash to pay off debts. Cash machine cards and debit cards can also be used to access an account or make cash withdrawals.
Most banks provide some form of current account service. Some may require a minimal initial credit before establishing a new account. A student or other low-income applicant may choose a no-frills current account which does not charge fees for the use of personal cheques and other services. Other customers may derive benefit from interest payments by maintaining a high minimal balance monthly.
As a rule, a current account is handled through thorough posting of debits and credits. The account holder has a supply of official cheques with the essential routing and posting information. When a cheque is filled out appropriately, the recipient can put it into his or her own bank account. A bank worker then files the cheque electronically and the cheque writer's bank receives the cancelled cheque and amount to be withdrawn from the cheque writer's account. This procedure is applied for every cheque written against an individual current account.
Owners of current accounts should keep track of their balance, even though the financial institution will routinely make its own accounting statements. Cheques must reflect an actual amount contained in the current account itself. If a cheque is written for an amount of money higher than the available balance, the cheque writer faces countless fees and possible legal activeness. The recipient of the 'bad' cheque can demand instant cash payment for the original debt and a fee for the returned cheque. Some banks will shield current account holders by making the appropriate payments and informing the cheque writer about the overdraft. Most often the financial institution will recover their losses through substantial service charges, so it is better not to write cheques when the balance is unknown.
Most banks have several different methods which enable current account holders to check their balances and reconcile their records. Printed monthly statements are mailed to current account owners. Cash machines render an option to check the balance, while online or phone-in accounts can offer real time updates on which cheques have been processed and which are still outstanding.
For more information on current accounts, visit www.checkingaccount.ca. |
