What is a Current Account? Key features, benefits & important details

Updated on: 18 Apr 2024

There may be instances where you may have come across the question, ‘What is a current account?’. Here’s what it means.
The banking sector offers different types of accounts that cater to your diverse financial needs. One such account is a current account, best suited for business owners and companies.

As such, it has some distinguishable attributes from a savings account, which allows it to service the specific needs of enterprises. Read on to learn about the current account, its features, benefits, how it differs from a savings account, and more.

Current Account: A Brief Overview

This is a type of non-interest-earning bank account mainly operational for business-related transactions. This explains why there aren’t restrictions on the number of transactions, such as cash withdrawals, fund transfers, cash deposits, etc., in a current account.

The following entities can open a current account:

Individuals
Sole proprietors
Partnership firms
Private companies
Public limited companies
Societies
Trusts
Hindu Undivided Family

Features of a Current Account

Here is a quick overview of the features and benefits of a current account.

Feature & Benefits	Description
No Interest	This type of account does not earn interest on the deposit.
Easy Access	Using this account, you can access your funds instantly via card, cheque, net banking, mobile banking, etc.
Higher Withdrawal Facility	You can make an unlimited number of withdrawals from your current account.
No Limit	This account doesn’t have a limit on the number of transactions you can make in a day, which can be beneficial for businesses.
Overdraft Facility	Despite exhausting your account balance, you can still withdraw funds using the overdraft feature of the current account, which gives you access to instant credit.
Minimum Balance	All banks have different limits for minimum average balance, which you must maintain to avoid penalties.

Difference Between a Current Account and a Savings Account

To better understand the meaning of a current account, here are all the differences you need to know.

Parameters	Savings Account	Current Account
Purpose	Generally used to secure funds for short-term goals, build an emergency corpus, or earn interest on surplus funds	Used to make regular transactions for business-related expenses
Suitability	Ideal for salaried employees and people with regular income	Suitable for individuals who require a high transaction limit, such as business owners, entrepreneurs, self-employed professionals, etc.
Interest	Earns interest annually depending on the rate, which varies from one bank to another	Doesn’t earn any interest
Overdrawing Facility	This type of account does not allow the withdrawal of funds over and above the available balance	You can withdraw additional funds to meet emergency financial requirements
Minimum Balance	Requires you to maintain a minimum balance depending on the financial institution	The minimum balance requirement depends on the respective bank
Transactions	You can only make limited transactions per day	There is no limit to the number of withdrawals you can make in a day

Steps to Open a Current Account

Here is a step-by-step guide on how to open a current account.

Step 1: Choose a bank by comparing their benefits, eligibility criteria, and other account features
Step 2: Visit the bank’s website
Step 3: Go to the ‘Current Account’ section and check the account opening options
Step 4: Fill in the form with your personal and other details
Step 5: Download the form and take out a printout
Step 6: Visit your nearest bank branch
Step 7: Apply with the relevant documents
Step 8: Complete the KYC process and make an initial deposit

Following these steps, you can easily open a current account with your preferred bank. However, all financial institutions have their eligibility criteria, a variety of account types, and required documents, which you must check before applying.

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FAQs on Current Account

What is meant by a current account in a bank?

This is a type of banking account used by merchants, business owners, and companies to make day-to-day transactions. Companies also open current accounts for their employees for salary transactions.

Does the current account have an ATM card?

Yes, you can use this card to withdraw funds as well as authenticate your digital payments.

Can I convert my savings account to a current account?

No, it isn’t possible. Remember, a current account has been exclusively designed for business transactions. Since a current account has additional benefits to a savings account, it makes business transactions easy.