The Ins and Outs of Current Accounts
With a current account, consumers can save money in a safe location that can then be used to make payments. A current account allows the consumer to choose from a variety of payment methods including:
- Debit cards
- Direct debits
- Standing orders
Each of these payment methods has its own benefits and drawbacks. In addition, some payment methods may be better suited to certain purposes. Cheques, which involve signing over a paper promise to make a payment, are the most well-known payment method associated with current accounts. In fact, most current accounts automatically include the issue of a cheque book.
Despite the popularity of cheques, standing orders and direct debits are becoming increasingly common. Both of these payment methods are automated, though standard orders are controlled by the account holder whereas direct debits are controlled by the payment recipient. Of course, certain safeguards are put into place to help protect the account holder.
Many current account holders also utilize a debit card. The debit card, which looks like a credit card, allows the account holder to access his or her account with ease. In fact, all the account holder needs to do is to swipe the card just as he or she would do with a credit card. The amount of the purchase is then automatically deducted from the cardholder’s current account.
Debit cards provide the same conveniences as credit cards but do not involve borrowing money. On the other hand, debit cards typically do not provide the same perks as credit cards, such as payment protection. Therefore, consumers need to think smart when making purchases in order to determine which payment method is best for them.
BACS, CHAPS, and SWIFT all involve making automatic account transfers. With BACS, the current account holder can make account to account transfers within the UK. As such, these transfers do not take any time to clear. CHAPS also provide same day transfers from one account to the next, while SWIFT allows for account transfers to international accounts.
A person with a current account may also complete his or her banking in a variety of settings. Traditionally, customers have visited branch networks to complete their banking needs. At branch networks, consumers can receive personal counter service or seek financial advice. As technology advanced, however, branch networks began to offer additional methods for customers to complete their transactions. Cash machines and telephone banking soon became available.
With cash machines, account holders can quickly and easily withdraw or deposit money from a machine without the need to actually talk to a human. This is particularly convenient for those needing money after regular business hours. Account holders can also make transfers among their bank accounts at cash machines.
The Internet has opened up additional possibilities for current account owners. With Internet banking, also referred to as online banking, customers can complete transactions completely on the Internet. This also allows for the convenience of completing transactions during off-business hours as well as from the comforts of home.