Friday, 12 August 2011

Things to Consider When Opening a Current Account

Current accounts have become popular nowadays because they meet two of the most important banking requirements: they offer a secure way of storing money; and, they allow a wide range of day-to-day banking transactions. Whether the account holder is an individual or an organization, these accounts provide a stress-free banking experience.
Most current accounts offer the same benefits and features - checkbook, ATM card for withdrawal, access for online transactions, overdraft facility, ability to earn interest - just to name a few. The bottom line would be: With which banking institution would you open your account? What will make you decide which bank to open your current account with?
It makes sense to look for a bank that works hard for the hard-earned cash you store while not penalizing you heavily for going into the red. You can make a rewarding research to find the bank that would give you a better financial return. The "unseen" factors to consider when opening a current account are as follows:
Rates. You have to make a careful consideration of the account's Annual Equivalent Rate (AER) and the Annual Percentage Rate (APR). AER refers to the amount of interest your account expects to earn; APR deals with what is charged to you for any money you overdraw. To get the best deal, it would be best to find a bank that offers competitive AER on your money and a low APR on your overdraft facility.
Terms and Conditions. Most deals in the marketplace are packaged attractively so you have to be on guard for pre-conditions attached. One of these pre-conditions may include a lower interest rate after a certain period of time. Some interest rates are tiered so that your interest fluctuates with amount of money stored in your account. There are banks who offer promotional rates but only to lure you to open accounts with them.
Extras. Look for packages that come with extras. At least, you should be rewarded for opening your current account with them. Some of these extras may include travel insurance or breakdown cover.
With just a little amount patience and some additional research, it is possible to find a current account deal that is tailored to your taste. You can always find a deal that would work in your favor. Just remember the three unseen factors to consider when opening current accounts - rates, terms and conditions, and extras - and you are off to wonderful banking experience.
Jason O. Joaquin is an accountant and freelance business consultant. Currently, he is employed as Internal Audit Manager in a group of companies in southern Philippines.
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