A current bank account which is widespread in North America as checking account and cheque account in United Kingdom, is actually designed to provide frequent funds transfer facility. This is one type of deposit account that can be opened with a bank or any financial institutions to safe, fast access of money on demand and within shorter period. Funds can be transferred via various means as per terms and facilities available with the banks or institutions the account is held with. Since, account holders can withdraw money of any amount and there are no regulations regarding fixed number of time the account holder can access their money from the account. As long as balance is remaining in the account, customers can withdraw as per their requisitions. Also there is no hard and fast regulations regarding the amount for opening such bank account. These accounts are basically meant for providing convenient transaction of money on needs for business people, companies or firms or any public enterprises. They are advised to maintain this account to make frequent cash transactions in a single day. Hence, these accounts are not intended for savings of money or gain of interests. The current account interest rate is defined as Annual Equivalent rate or AER, in short. Before you approach to open a current account, get to know what an annual equivalent rate is and how it works.
The current accounts pay customers with current account interest rate or AER. This rate refers what the amount would culminate into if customers were needed to be paid once in every year. Higher this annual equivalent rates rise, more amount of interests the customers will earn on their remaining credit in the account. The AER works in the same manner as the overdraft does with the little difference that is money through AER gets deducted than to be credited.
Some customers inquires whether a current account interest rate may change over a stipulated period of time and that too without receiving any notice from banks or the institution it is held with. Yes, interest rates of current account are likely to be altered. However, the account provider sends notices detailing the effects before and after changing of interest rates. Before you take any decision regarding opening a current account or continuing the account when changes are made interest rates, you should tally the rates. Customers can take a advantageous decision when they compare the rates when the credit is remaining and when you have withdrawn from the account. The current account interest rate having high rates on credit and low interest rates on overdrawn of amount is the most viable combination customers should go for.
Customers should note there are some variations in current account interest rate. One type is interest rates on disarranged borrowing that banks charge when customers exceed the agreed limit of overdraft. On exceeding this pre-determined limit for overdraft, customers are charged with unauthorised borrowing which result in high interest rates on them. There are also those current accounts that feature tiered interest rates which work as per the money remaining in the balance of current account.
Many of us get into fix whether opening a current account or savings account will be a wise decision. If you have definite goal of saving money for coming future, opt for savings account, especially those high interest saving accounts. When you are planning to accumulate enormous amount of money over a period, then high interest saving accounts are the right options. For example, if you want to save money for children's educational purposes, property purchase or building homes, keep abreast the idea of these high interest saving accounts. These accounts feature much higher rates of interests than standard accounts for which customers need to pay almost nothing. On the contrary, people invest a large amount for opening high interest saving account which can be up to 5 percent or even better.
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