Current account description and questions. The current account enables you to participate in cashless payment transactions and to process many different banking transactions. You can use it as a wage and salary account or for other incoming payments such as pension and maintenance, but you can also use it to pay your bills by transfer, standing order or direct debit or transfer amounts of money to other accounts with transfer postings. If you need cash then you can withdraw it from your checking account. It can also be used as a so-called correspondence account, for example for credit cards, securities transactions and loans.
Depending on the provider, you have the choice between paid or free current accounts, either with a branch bank or a direct bank, with the latter only as an online account. Warning: there is usually no interest on a credit balance. You can arrange an overdraft facility with your bank which makes it possible to overdraw the current account within a certain limit. Credit and overdraft interest rates are variable and can be adjusted by the bank at any time.
Possible goals: When do I need a current account?
You must have a current account in order to be able to use cashless payments .
Risks: What are the risks?
Foreign currency risk: This risk does not exist when you use a dollar-based account.
Issuer risk / credit risk: Credit balances on current accounts depends on the countries’ in statutory deposit insurance per customer. A credit risk may arise in the event of credit balances exceeding this. A current account with foreign providers needs to be carefully considered due to the risk of insolvency.
Availability: Depending on your personal credit limit for withdrawals, transfers and other financial transactions, you may also have amounts of money that are higher than the balance in your checking account. This depends on the creditworthiness, i.e. on whether the customer is creditworthy. Minors receive a current account only on a credit basis. You can usually withdraw a maximum of 500 dollars a day from ATMs. You should pay particular attention to this daily limit if you have an account with a direct bank: You may not be able to withdraw larger amounts if your bank does not have partner branches. Incidentally, this also applies to cash deposits: Although they are basically possible at any bank or savings bank, they are often subject to a charge. In any case, you should check with your financial institution
Debt Risk: Be careful when using your overdraft facility to overdraw your account so you don’t go into debt. In addition, the overdraft facility is the most expensive way to borrow money to bridge a financial bottleneck.
How are the performance, profit and benefits of the current account structured? If you take part in cashless payment transactions, you can take advantage of associated advantages such as bank transfer, standing order, girocard or direct debit. You also can use it as a reference account, for example for paying out savings.
NOTE: The current account is less suitable as an investment or savings account, because credit balances usually earn little or no interest. Remember that credit interest is capital income and therefore taxable.
What are my obligations towards the bank?
You must regularly check the current account balance and ensure that your current account has sufficient funds so that the debits such as rent or electricity can be carried out. It is advisable to check the postings on the bank statements regularly and not at too long intervals. Check your quarterly statements before the objection period expires! You can then no longer dispute this.
If you overdraw your account, the credit institutions require so-called disposables and overdraft charges. These are by no means small and vary from bank to bank. Find out about the interest rate from your institute to avoid unpleasant surprises. If necessary, ensure that you have sufficient funds in your account so that you do not have to overdraw it in the long term. This does not affect credit accounts.
NOTE: The overdraft facility is granted in order to bridge short-term payment bottlenecks. If you want to finance larger purchases, a loan is the better – and more cost-effective – solution.
How can I access my checking account?
You can, depending on the amount of your personal credit limit funds in your checking account, transfer or have it collected by direct debit money.
Where can I open a current account?
The branch or direct banks offer differently designed current account models with various additional services such as credit cards. You should therefore take the time to obtain thorough information and advice before opening an account. You can obtain information and advice in the branches (branch banks only), online or by telephone from the respective provider.