As part of discussing the basics of current accounts, let us define what a current account is (in UK banking circles.) A current account is simply a type of bank account that you place money in for an undetermined length of time. You (the account holder) still own the rights over that money deposited in your current account, but the bank will allow you to have a line of credit whose value is equivalent to the amount of money you deposited in the current account. Thus, your current account does not actually contain any money (meaning, cash) but instead your current account acts as a credit line extended by the bank.
The bank has a legal obligation to provide you with a means to access that line of credit, and that means is usually a cash card or debit card. These are two different types of cards. A cash card permits you to withdraw cash from your current account via the ATM (automated teller machine). A debit card, on the other hand, can be used for electronic shopping which means you allow the retailer to deduct the amount you spent on your purchases from your current account.
A debit card can only be used if the amount (or line of credit) present in your current account is sufficient.Many banks now offer internet banking along with the current account service. The internet banking option will permit you to use your internet access to conduct various banking services (including paying bills, opening new accounts, and checking the balance of funds remaining in your account.) Another option that is provided with your current account is the telephone banking service.
More Current Account Basics
There are banks which provide a cheque book when you open a current account with them. With a cheque book, you have the authority to write a cheque representing payment for a particular expense. The amount on the cheque will be honored by the retailer if you have sufficient funds in your current account.
To clarify it further, the retailer will deposit the cheque you signed in his own bank account, so his bank has the responsibility of checking if you have enough credit in your current account for the payment you owe the retailer. If you do not have enough funds (or credit) in your current account for the payment represented by the cheque, then the cheque you issued will bounce, and it will be returned to you. You then have the responsibility of making payments to the retailer in another way, and you'll be responsible for paying the NSF fees to your bank (non-sufficient funds).
Dormant Current Accounts
If you have not used your current account for quite some time, you must be careful that it is not classified by the UK government as a dormant account. Some people apply for a current account, use it for awhile, then forget all about it (for whatever reason.) Other people who own a current account may die, with their relatives and legal representatives being left in the dark about the existence of the current account. National Savings&Investments deems current accounts that have not been used for at least 15 years as dormant accounts.
A current account is also considered dormant if you have failed to notify the bank in writing or in person about what you intend to do with your current account, for a period of time. If your bank discovers that you have a dormant current account with them, rules dictate that the bank should notify you in writing at the last known address you left with the bank. However, if the bank finds its letter to you returned, unopened, then the UK government has the right to declare your current account to be a dormant account. At that point, the UK government will try to assert ownership over the balance left in your current account.
Current Accounts and the UK Government
At present, the UK government requires an Act of Parliament before it can assume ownership over funds left in dormant current accounts. This Parliamentary decision will most likely be realized by 2008. The good news is, if the owner of the dormant current account is still alive after the UK government takes over his account, he can still claim ownership over it later (if he has enough evidence of ownership).
Reactivating Dormant Accounts
If your current account has been deemed dormant by the bank, you can still re-activate it by presenting your passbook and a valid form of identification to the bank representative. There are UK banks which are now actively trying to get the attention of the owners of dormant current accounts. If the owners do not reply, the government will be able to use the funds.