A current account is a service provided by banks and other financial institutions which enables bank clients - both individuals and businesses - to deposit money and debit it from a federally-shielded account at any time. The definitions of a current account may differ, but in general a current account holder can pay off debts by means of personal checks in place of cash. Cash machine cards and debit cards can also be used to access an account or withdraw cash.
Most banks render some type of current account service. Some may require a minimum initial credit before establishing a new account, along with proof of identification and contact information. Low-income customers may open a no-frills current account where personal cheques and other services are available free of charge. Other clients may gain benefit from interest rate payments, provided that they maintain a high minimum balance each month.
A typical current account is handled through thorough posting of credits and debits. The account holder has a supply of official cheques with the required routing and mailing information. When a cheque is filled out properly, the recipient treats it the same as cash and completes the transaction. After the recipient has deposited the cheque into his or own bank account, a bank employee files the cheque electronically and the cheque writer's bank receives the cancelled cheque and amount to be withdrawn from the cheque writer's account.
Owners of a current account are responsible for keeping track of their balance, though the bank will regularly 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 funds, the cheque writer will be charged numerous fees. The recipient of the 'bad' cheque can demand instant cash payment for the original debt as well as a fee for the returned cheque. Some financial institutions will protect current account holders by making the proper payments and informing the cheque writer about the overdraft. Often the bank will recoup their losses by charging for services offered, so it pays to avoid writing cheques when the balance is unknown.
Most banks have different methods which enable current account holders to check their balances and reconcile their records. Monthly statements are printed and mailed to current account holders. Cash machines offer 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 detailed information on current accounts, please visit www.checkingaccount.ca.
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Finance: Why to Open a Current Account?
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