Current account (banking)
From Wikipedia, the free encyclopedia
A current account is a deposit account in the UK and countries with a UK banking heritage offering various flexible payment methods to allow customers to distribute money directly to others. Most current accounts have a cheque book, offer the facility to arrange standing orders, direct debits and payment via a debit card. Current accounts may also allow borrowing via an overdraft facility.
Current accounts providers include banks, building societies and credit unions.
Since the internet revolution most retail banking institutions offer access to current accounts via online banking.
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[edit] Payment methods
- Cheques - Paper based promise to pay.
- Standing orders - Automated payments instructed by the account holders.
- Direct debits - Automated payment system controlled by receipient (with safeguards).
- Debit card - Electronic instruction requiring a plastic card or a personal number.
- BACS - UK account to account transfer taking time to clear.
- CHAPS - Same day account to account settlement.
- SWIFT - International account to account transfer.
[edit] Access
[edit] Branch networks
This refers to the practice of maintaining physical locations where customers can receive a wide array of banking and financial services, such locations are described as branches. They may provide access to a combination of cash machines, telephone banking, counter services and financial advice.
[edit] Cash machines
Cash machines are electronic devices that allow bank customers to make cash withdrawals and check their account balances without the need for a human teller. Many also allow people to deposit cash or cheques, transfer money between their bank accounts, top up their mobile phones' pre-paid accounts or even buy postage stamps.
[edit] Internet banking
Internet or Online banking describes the use of a bank's secure website to view balances and statements, perform transactions and payments, and various other facilities. This can be very useful, especially for banking outside bank hours and banking from anywhere where internet access is available.
[edit] Telephone banking
Telephone banking is the term applied to specific provision of banking services over the telephone. In many cases such calls are to a call centre or automated service, although some institutions continue to answer such calls in their branches. Often call centre opening times are considerably longer than branches, and some firms provide these services on a 24 hour basis.
[edit] Lending
[edit] Overdraft
An overdraft occurs when withdrawals from a bank account exceed the available balance. This gives the account a negative balance and in effective means the account provider is providing credit. If there is a prior agreement with the account provider for an overdraft facility, and the amount overdrawn is within this authorised overdraft, then interest is normally charged at the agreed rate. If the balance exceeds the agreed facility then fees may be charged and higher interest rate might apply.
[edit] Offset mortgage
An Offset mortgage is a type of mortgage common in the United Kingdom used for the purchase of domestic property, the key principle is the reduction of interest charged by 'offsetting' a credit balance against the mortgage debt. This can be achieved via one of two methods either lenders provide a single account for all transactions (often referred to as a current account mortgage) or they make multiple accounts available which allow the borrowers to notionally split their money according to purpose whilst all accounts are offset each day against the mortgage debt.
[edit] See also
- Checking account for the closest U.S. equivalent
- Current account mortgage
