6 Major Benefits of a Current Account

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There are numerous benefits of a current account, which is specifically designed for businesses. While it bears no interest, you can access funds instantly and simplify business transactions.

By leveraging its flexibility and liquidity, you can streamline business operations. This way, you can forego stress related to accessing funds for working capital and other needs and focus on your business.

Key Benefits of a Current Account

The following are some of the features of a current account that make it a must-have for business owners:

Freedom of Unlimited Transactions

A significant benefit of these accounts is that they offer an unlimited number of transactions. This allows you to make unrestricted withdrawals, transfers or deposits.

This feature is particularly helpful for businesses as they regularly engage in a high number of transactions with:

Customers
Manufacturers
Lenders
Vendors
Other Third Parties

Seamless Transaction Options

Most banks offer online banking services for current accounts. This helps:

Simplify access to account details
Facilitate fast payment processing
Fund transfers from any location

Using it, you can carry out financial activity round the clock from the comfort of your home or office. Numerous current accounts support multiple currencies. This enables businesses with operations in other countries to transact in various currencies.

Effortless Financial Management

With this account, you can effectively manage your personal and business finances. This is due to various features it offers, like the provision of cheque books, online banking, 24x7 availability, etc.

These resources enable easy monitoring of cash flow, allowing you to strengthen control over finances.

Flexible Overdraft Facility

One of the advantages of a current account is that it offers an overdraft facility, which allows businesses to withdraw funds beyond what is available. You can capitalise on an opportunity or bridge working capital shortages with this feature.

Overdraft facilities are available up to a certain limit, and these funds come with no restriction on end-use. You can employ them as per the needs of your business, such as:

Use them to finance payroll
Purchase/lease a new workspace
Pay creditors
Hire consultants
Participate in trade shows

Customisable Features

One of the notable benefits of a current account is that many banks allow you to tailor it. This allows you to select the features and amenities that align with your personal and business needs more effectively.

There are different types of current accounts, like a flexi current account and a zero-balance account. You can choose an account with different levels of customer service and features. Some of the other types include:

Merchant Current Account
Foreign Currency Current Account
Startup Current Account

Easy Access to Credit

The need for funds can arise at any time in a business cycle. In this situation, getting a business loan can help address your unforeseen requirements. Lenders approve your credit requests only if you possess a strong financial profile and a good credit score.

Maintaining a current account boosts your credibility. It helps with easy access to credit if you apply for a loan from the same bank. Your current account also provides insights into your financial stability. Thus, it helps lenders assess your creditworthiness.

Higher Security

Businesses typically have a large volume of high-value cash transactions. By depositing the same in this account, the risk of loss or damage is reduced significantly. This helps you carry on operations and pay third parties as well as employees stress-free.

Cheque Balance

Unlike a savings account, you do not have to restrict yourself to using a fixed number of cheques in a year. As a current account holder, you get a fresh set of cheque leaves every month that you can use without any charge. This helps you make a large number of transactions without hassles.

Different banks have a different set of criteria for various current account limits, such as:

Transfer Limits
Cash Deposit Limits
Daily Withdrawal Limits
Purchase Limits

To maximise your benefits, choose the right bank with account limits that suit your business requirements.

What distinguishes a current account from a savings account?

A savings account is typically more suitable if you are a salaried individual with a regular monthly income. This is because you get interest on your deposits in a savings account. On the other hand, a current account is better for businesses as it allows you to carry out transactions freely and more frequently.

What are a few key benefits of a current account?

When you open a current account, you get many benefits, such as multiple deposits and withdrawals and an overdraft facility. Higher transaction limits, customisable features, and digital banking features are other advantages.

How does the overdraft facility work with a current account?

This feature allows you to access funds beyond your account balance, helping you manage cash flow gaps or unexpected expenses. You can repay the overdrawn amount as and when you have funds without strict deadlines.

Can I open a current account when I have no business?

Yes, if you are an individual with a salaried income, you can opt to open a current account for seamless personal transactions.

Is a GST number account required for current account opening?

No, having a GST number is not mandatory. If you are an individual without a GSTIN, you can still open a current account with your preferred bank.

What documents do I need to submit to open a current account?

To open a current account, you need to submit your identity proof and residence proof. You also need to submit identity and address proof of your business, taxation documents, and a cheque from your existing account. You may also need to furnish your latest passport-size photograph, among other documents.

What are the terms of eligibility for a current account?

The criteria of eligibility for a current account depends on the bank. Generally, the following can open this account:

An Indian individual
A partnership firm
A sole proprietorship firm
A HUF
An LLP

You are also eligible to open the account if you are a public or private company.

Why is a current account better than a savings account?

One may be better than the other, depending on your income and requirements. A current account is beneficial for managing day-to-day business expenses. A savings account is more suitable for holding extra cash or household savings.