Banking

Survey

Are you confident you are getting the best rates on your banking products?

Current Account Basics

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.

How to Use a Current Account

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.