Meaning of Current Account
A checking account is a service provided by financial institutions (banks, savings and loans, credit unions, etc.) that allows individuals and businesses to deposit money and withdraw funds from an account protected by the federal government.
The terms of this type of account can vary from one bank to another, but in general, the owner of such an account can use personal checks instead of cash to pay debts.
You can also use electronic debit cards or ATM cards to access individual accounts or make cash withdrawals.
Someone with a checking account needs to make sure the account is balanced.
Virtually all banks offer some type of checking account service for their customers. Some may require a minimum initial deposit before establishing a new account, along with proof of ID and address.
A student or other low-income applicant can opt for a simple account that does not charge fees for the use of personal checks and other services. Others can benefit from interest payments by maintaining a high minimum balance each month.
Some states are required by law to provide a salvage option for seniors and low-income customers. This type of account waives many of the fees that banks may charge, such as monthly service fees for low balances and ATM surcharges.
Customers can usually withdraw or deposit money into a checking account at the drive-thru.
A typical checking account is managed by careful posting of deposits and withdrawals. The account holder has a supply of official checks containing all essential routing and shipping information.
When a check is successfully completed, the recipient treats it as cash and completes the transaction.
After this check has been deposited into the recipient’s own bank account, a bank worker presents the check electronically, and the check writer’s bank receives the canceled check and the amount to be debited (withdrew) from the check writer’s account . This process continues for each check drawn on an individual account.
With a checking account, individual drafts can be used as a form of payment.
Owners of a checking account are ultimately responsible for keeping track of their available funds, although the bank will usually issue its own financial statements.
Checks must represent an actual amount of money contained in the account itself. If a check is written for more than the available balance, the check writer faces numerous charges and possible legal action.
The recipient of the bad check may demand immediate cash payment of the original debt, as well as a substantial fee for the returned check. Some banks will protect account holders by making the proper payments and notifying the check writer that an overdraft has taken place.
Most of the time, the bank will recoup its losses through substantial service charges, so it’s best to avoid writing checks when the balance is unknown.
Anyone with a checking account can make cash withdrawals at an ATM.
Most banks have several different methods that allow checking account customers to check their balances and reconcile their records. Monthly paper statements of debits and credits (deposits) are mailed to individual account holders.
ATMs offer an option to check current balance, while online or phone accounts can provide real-time updates on which checks have processed and which are still pending.
This information can be compared to entries recorded in a journal called a check register.
Some retirees and seniors open a joint checking account with a child or other close relative.
Many banks allow checking account holders to access their funds with a debit card or ATM.