5 Benefits Of Having A Current Account

By Bank Bazaar | September 30, 2017

5 Benefits Of Having A Current Account

A Current Account is usually opened by business entities in order to carry out their banking transactions. Being a zero-interest account, Current Accounts are generally associated with businesses that deal with huge transactions on a regular basis. However, a Current Account can be useful for other entities as well.

In general, sole proprietors, freelancers and other people who work on their own tend to use their personal Savings Bank account for business transactions. However, this deprives them of the benefits associated with a Current Account.

Additional Reading: Advantages Of A Current Account

Here are 5 benefits of having a Current Account

  • Segregate business finance from personal finance

A freelancer or a sole proprietor is not a separate legal entity who is different from his business, unlike a company. But, this does not mean that the bank accounts should be treated the same way.

Opening a separate Current Account, in which business income and expenses are recorded, helps in bringing about a distinction of what pertains to the business and what pertains to the personal finance of the proprietor.

This not only helps in better financial planning on the personal front, but also helps in portraying an exact picture about the business at any point in time. In some cases, when all the transactions are carried out in a single personal account, the proprietor may not be able to recognise that his business is running at a loss if his personal finances are healthy.

A segregation of business finance from personal finance is critical, and this is enabled by having a Current Account.

  • Professionalism in business

While dealing with business acquaintances, it is very important to maintain professionalism. This helps in enhancing your image and also in the growth of the business.

A Current Account in the name of your business is an important factor in achieving this. This is because the cheques you issue and receive will carry the name of your Current Account. Having a Current Account signifies your seriousness in carrying out your business.

Additional Reading: Know Your Cheque

  • Ability to prove credit worthiness

 Sometimes, your creditors and other lenders may want to check your credit worthiness before advancing credit to you. Operating a Current Account can help in facilitating this process.

You could give them a letter issued by your bank stating that you hold a Current Account. Alternately, the credit worthiness can also be checked using interbank connections.

Sometimes, if you are into export/import, there is a need to issue a guarantee/letter of credit to foreign counter parties. Having a Current Account with a reputed bank helps in easing this process as well, thus helping in establishing your credit worthiness.

Additional Reading: How Your Credit Score Can Prove Your Credit Worthiness

BB Tip: Check your Credit Score for FREE by clicking this link

  • Overdraft facility

Another important benefit of having a Current Account is that one can easily avail overdraft facilities when needed. This means that the account holder can overdraw the balance in his account on a temporary basis, to plug any shortfall in funds.

This is, in essence, a short-term borrowing on which the bank may or may not levy interest. A normal savings bank account does not have the facility of overdraft. A Current Account can therefore help in meeting your need for funding in the short term.

Additional Reading: Current Account VS Savings Account 

  • Ease in banking transactions

A Current Account by its very nature offers added benefits when compared to a personal Savings Bank Account. With increasing competition, banks are now ready to offer value added services at no extra cost to Current Account holders.

Banks prefer opening Current Accounts since these accounts do not pay the account holder any interest. As a result, features like 24 hours phone banking, doorstep banking, internet banking and mobile alert services come inbuilt with most Current Account kits.

In addition, the account holder can also enjoy a certain number of free pay orders / demand drafts and the facility to transfer funds instantly using NEFT/RTGS etc. Some banks offer a zero balance account as well, wherein there is no need to maintain a minimum balance.

Free inward remittances, deposits and withdrawals at any location, multi-location transfer, periodical statements and personal relationship managers to cater to your requirements are some of the other services offered.

While most of these services are also available with a Savings Account, it may require you to maintain a certain minimum balance. A Current Account helps in easy and quick banking transactions, which becomes very important while running a business.

Additional Reading: Avail Banking Services Using A Basic Mobile Phone

So, yes opening a Current Account has a ton of benefits. But, if you’re looking to explore other avenues then you must try some of our Fixed Deposit accounts. Our rates start from 7.49%.

All information including news articles and blogs published on this website are strictly for general information purpose only. BankBazaar does not provide any warranty about the authenticity and accuracy of such information. BankBazaar will not be held responsible for any loss and/or damage that arises or is incurred by use of such information. Rates and offers as may be applicable at the time of applying for a product may vary from that mentioned above. Please visit www.bankbazaar.com for the latest rates/offers.

Related Post

14 thoughts on “5 Benefits Of Having A Current Account

  1. YATIN

    I have a small business since last year.but currently I have no any current account. Kindly suggest which bank I prefer for current account.

    Reply
    1. Team BankBazaarTeam BankBazaar

      Hi Yatin,
      Thanks for writing to us. You will need to do a little bit of research on current accounts with different banks to understand which is the best account for you. Some banks offer an auto sweep-in facility which is useful for sweeping excess funds from your account into a Fixed Deposit account. Compare the features and benefits offered by each bank before you make a decision.

      Cheers,
      Team BankBazaar

      Reply
    1. Team BankBazaarTeam BankBazaar

      Hi Gaadikey,

      Thanks for your valuable feedback. Please keep reading our blog for more.

      Cheers,
      Team BankBazaar

      Reply
    1. Team BankBazaarTeam BankBazaar

      Hi Amit,

      Thank you for your valuable feedback. Please keep reading our blog for more.

      Cheers,
      Team BankBazaar

      Reply
  2. Dr.Hemant Rameshwar gadge

    Hi,
    I am doctor and want to open current account for my clinic, do bank provide sweep machine facility

    Reply
    1. Team BankBazaarTeam BankBazaar

      Hi Hemant,

      Most banks provide a sweep-in facility for current accounts. Please get in touch with your bank for more details about this.

      Cheers,
      Team BankBazaar

      Reply
    1. Team BankBazaarTeam BankBazaar

      Hi Anas, Yes. it is possible for you to open two recurring deposits with the same bank.

      Reply
  3. Sanjay prasad alli

    Hi team I am salaried person but I want to go for small scale business and I want to open current account and just would like to know what is the benefits of current account opening please suggest

    Reply
    1. Team BankBazaarTeam BankBazaar

      Hi Sanjay prasad alli,

      A Current Account lets you use the overdraft facility which is the most unique feature of this type of account. In this case, you can overdraw the balance in your account on a temporary basis to plug the shortfall in funds. This is because a Current Account is mainly used for business transactions. For all other benefits, please read through this article.

      Cheers,
      Team BankBazaar

      Reply
  4. Rahul Reddy

    Hi Team,

    may i know, what are tax benefits for a sole proprietor in case of having a current account (business Account)?
    As of my knowledge, I think while at proceeding ITR when need to consider the amount transaction had been made under current account only, need not to consider the personal accounts transaction.
    Am i right? Please correct me if i’m wrong.

    Such an enhanced information in this article regarding current account.

    Reply
    1. Team BankBazaarTeam BankBazaar

      Hi Rahul Reddy,

      There are no tax benefits for holding a current account. If you are filing an ITR for your business, you will be taking into account your business income and expenses.

      Cheers,
      Team BankBazaar

      Reply

Leave a Reply

Your email address will not be published. Required fields are marked *