If you run a business, no matter the type or size, opening a Current Account should be on your to-do list. From startups to home-based businesses, everyone requires a Business Bank Account. Before you check this item off your list, here are some important things you need to consider:
1. Look into the average quarterly balance
A Current Account comes with minimum balance requirements. Unlike Savings Accounts, they do not pay interest on the remaining balance. The Average Quarterly Balance (AQB) requirement may range from Rs. 10,000 to Rs. 2.5 lakh or more. This number depends on the type of account you open and the features you enjoy. It would help to be careful about high AQB as it would unnecessarily tie up your working capital.
2. Consider its features
A Current Account’s benefits differ from Savings Accounts. Free cheque payments and collections, free demand drafts and pay orders, high withdrawals and transaction limits, Home Banking services, etc., are among several benefits designed to meet every business owner’s needs. It is essential to go through the features of specific account types, such as Zero Balance Current Account, which lets your balance reduce to zero without charging penalties.
3. Check the overdraft facility limits
When you require money to meet short-term business needs and lack sufficient working capital, you can overdraw your Current Account balance by a certain amount, depending on its overdraft limit. This is essentially a short-term, unsecured Loan available on demand.
4. Review the interest rates
While a Current Account does not generate interest income on your AQB, some offer the benefit of earning attractive returns on your excess balance with sweep-in and sweep-out facilities. If your idle funds are above a pre-fixed threshold limit, they automatically convert into a Term Deposit and earn you attractive returns.
5. Think of the long-term
Your business banking needs may now be minimal, but as you grow and expand, they will evolve, too. Thus, you need to understand the meaning of a Current Account and opt for a bank that provides these services. In addition to premium services, you need to check the range of digital services and the quality of their customer service.
Importance of assessment
While reviewing the benefits, features, charges, eligibility, and documentation requirements for opening a Current Account may take time, this activity is crucial. After thoroughly assessing them, you do not face hiccups and seamlessly meet all your business banking needs.
Conclusion
Current Accounts offer many free ATM transactions and cash deposit limits, which are suitable for businesses and merchants who receive multiple payment requests and receipts daily. Fund management becomes more accessible with apps that regularly track payments and monthly account statements.
