Trading account , checking account , current account , checking account , or share draft account (in credit unions) is a deposit account deposited in a bank or other financial institution. This is available to "on demand" account holders and is available for frequent and immediate access by the account owner or to others as the account owner can redirect. Access may be in various ways, such as cash withdrawals, use of debit cards, checks (checks) and electronic transfers. In economic terms, funds deposited in transaction accounts are considered as liquid funds and in accounting terms they are considered cash.
Transaction accounts are operated by businesses and private users. Depending on the country and local demand economy, they may not earn any income or they can earn very high interest rates. Again depending on the state, the financial institution maintaining the account may charge the account holder's maintenance fees or transaction fees or offer free services to the holder and charge only if the holder uses additional services such as overdrafts.
Transaction accounts are known by various descriptions, including current accounts (English English), chequing accounts or checking accounts when held by banks, sharing draft accounts when held by a credit union in North America. In the UK, Hong Kong, India, and a number of other countries, they are usually called current accounts or checks. Because money is available on demand, sometimes they are also known as checking accounts or checking accounts. In the United States, NOW accounts operate as transaction accounts.
Video Transaction account
History
In the Netherlands in the early 1500s, Amsterdam was a major trading and shipping city. People who have gained a large accumulation of cash start depositing their money with cashiers to protect their wealth. These cashiers hold money for a fee. Competition encourages cashiers to offer additional services, including paying money to anyone who carries written orders from depositors to do so. They keep the records as proof of payment.
This concept spread to other countries including the UK and its colonies in North America, where the landowners in Boston in 1681 pawned their land to the cashier who gave accounts that they could use to write checks.
In the 18th century in England, the precast inspection, serial number, and word "check" appeared. At the end of the 18th century, the difficulty of cleaning checks (sending them from one bank to another for collection) led to the development of clearing houses.
Maps Transaction account
Features and access
All transaction accounts offer a detailed list of all financial transactions, either through bank statements or passbooks. Transaction accounts allow account holders to make or receive payments by:
- ATM card (withdraw cash in Automated Traffic Machine)
- Debit card (direct cashless payment at store or merchant)
- Cash (deposit and withdrawal of coins and banknotes in branch)
- Checks and money orders (written instructions to pay)
- Direct debit (pre-authorization of debit)
- Standing orders (automatic automatic funds transfer)
- Electronic funds transfer (electronic funds transfer to another account)
- Online banking (direct transfer of funds to others via internet banking facility)
Banks offering transactional accounts may allow accounts to enter into overdrafts if pre-arranged. If an account has a negative balance, the money is being borrowed from the bank and the interest and overdraft fees as is usually charged.
Country-specific differences
In the United Kingdom and other countries with accounts of British banking heritage transactions are known as checking accounts. It offers a variety of flexible payment methods to allow customers to distribute money directly. One of the main differences between a UK demand deposit account and an American checking account is that they earn substantial interest, sometimes comparable to a savings account, and usually there is no charge for withdrawals at cashpoints (ATMs), in addition to fees by third-party machine owners such as that.
Transfer system
Certain payment modes are country-specific:
- Giro (funds transfer, direct deposit in European countries)
- In the United Kingdom, the Faster Payment Service offers close direct transfers, BACS offers a clear giros on a daily basis while the CHAPS takes place on the same day.
- Canada has an Interac e-Transfer service
- In India, NEFT and RTGS services are available to clear funds in a day.
Access
Access branch
Customers may need to attend bank branches for various banking transactions including cash withdrawals and financial advice. There may be restrictions on cash withdrawals, even in branches. For example, a cash withdrawal above a threshold may require notice.
Many previous transactions can only be done in branches now can be done in other ways, such as ATM, online, mobile phone and banking use.
Check
Checks are the traditional method of withdrawing from a transaction account.
Automatic cashier
Automated Teller Machine (ATM) allows customers from financial institutions to conduct financial transactions without attending branches. This allows, for example, cash to be withdrawn from accounts outside normal branch trading hours. However, ATMs usually have fairly low limits for cash withdrawals, and there may be daily limits for cash withdrawals other than branches.
Mobile banking
With the introduction of mobile banking a customer to conduct banking and payment transactions, to view balances and statements, and various other facilities using their mobile phones. In the UK, this has become the main way people manage their finances, because mobile banking has taken over internet banking as the most popular way for banks.
Internet banking
Internet or online banking allows customers to perform banking and payment transactions, to view balances and statements, and various other facilities. This can be convenient especially when the bank is not open and allows banking transactions to be conducted from anywhere Internet access is available. Online banking avoids the time spent traveling to a branch and standing in a queue there. However, there is usually a limit on the value of funds that can be transferred electronically on any day, so it is necessary to use checks to influence the transfer when the limit is reached.
Phone banking
Telephone banking provides access to banking transactions by phone. In many cases, the telephone banking hours are much longer than branch time.
Mail banking
Financial institutions may allow their customers to deposit checks into their accounts by mail. Mail banking can be used by virtual bank customers (because they can not offer branches or ATMs that accept deposits) and by customers who live too far away from the branch.
Stores and merchants provide debit card access
Most stores and merchants now have to accept debit card access to buy goods if they want to continue operating, especially now because some people only use electronic purchasing tools. In the UK it is now reported that 1 in 7 people no longer carry or use cash.
Cost
Any fees or fees charged by a financial institution maintaining an account, whether as a single monthly maintenance fee or for any financial transaction, will depend on a variety of factors, including state regulation and the overall interest rate on loans and savings, as well as the size of the financial institution and the amount access channels offered. This is why direct banks can offer low-cost or free banking, as well as why in some countries, transaction costs do not exist but very high loan rates are the norm. This is the case in the UK, where they have free banking since 1984 when then Midland Bank, in an attempt to seize market share, canceled the running account fees. It was so successful that all other banks had no choice but to offer the same or keep losing customers. Free banking account holders are now charged only if they use additional services such as overdrafts.
The cost of a financial transaction may be charged per item or for a flat rate that includes a certain number of transactions. Often, young people, students, senior citizens or high-value customers do not pay fees for basic financial transactions. Some offer free deals to maintain a very high average balance on their accounts. Other service charges apply to overdrafts, insufficient funds, use of external interbank networks, etc. In countries where there is no service fee for transaction fees, there is, on the other hand, other recurring service charges such as the annual charge of a debit card.
Interest
Unlike savings accounts, where the main reason for saving money is to generate interest, the main function of transactional accounts is transactional. Therefore, most providers do not pay interest or pay low interest rates on credit balances.
Earlier in the United States, Rule Q (12 CFR 217) and Banking Laws 1933 and 1935 (12 USC 371a) prohibited members of the Federal Reserve system to pay interest on current accounts. Historically, these restrictions are often circumvented by creating account types such as the Negotiate Withdrawal account (NOW account), which is not legally a checking account or by offering interest payments through banks that are not members of the Federal Reserve system. The Dodd-Frank Wall Street Reform and Consumer Protection Act, however, endorsed by Congress and signed into law by President Obama on July 21, 2010, repeal laws that prohibit flowering demand deposits, effectively cancel Regulation Q (Pub. L 111-203, Section 627). Revocation took effect on July 21, 2011. Since that date, financial institutions have been allowed, but not required, to offer a flowering demand deposit account.
In the UK, some online banks offer higher rates for many savings accounts, along with free banking (no fees for transactions) because agencies offering centralized services (telephone, internet, or postal services) tend to pay higher interest rates. The same applies to banks within the EURO currency zone.
High yield account
High yield accounts pay higher interest rates than typical NOW accounts and often serve as a loss leader to encourage relationship banking.
Lend
Accounts can lend money in two ways: overdraft and offset mortgage.
Overdraft
An overdraft occurs when a withdrawal from a bank account exceeds the available balance. This provides a negative balance account and basically means the account provider provides the credit. If there is an earlier agreement with the account provider for the overdraft facility, and the amount disbursed is in this official clearance, then interest is usually charged at an agreed rate. If the balance exceeds approved facilities then the fee may be charged and a higher interest rate may apply.
In North America, overdraft protection is an optional feature of chequing accounts. The account holder may apply for a permanent, or the financial institution may, in its sole discretion, provide a temporary overdraft on an ad hoc basis.
In the UK, almost all current accounts offer overdraft facilities approved earlier which are based on affordability and credit history. This overdraft facility can be used at any time without consulting a bank and can be maintained indefinitely (depending on ad hoc reviews). Although overdraft facilities can be authorized, technically the money must be paid on demand by the bank. In fact this is a rare occurrence because the overdraft is profitable for the bank and expensive for the customer.
Consumer reporting
In the United States, some consumer reporting agencies such as ChexSystems, Early Warning Services, and TeleCheck track how people manage their check accounts. The bank uses the agency to check the checking account applicants. Those who have low debit value are denied checking the account because the bank can not pay the account to be revoked.
Credit credits
Offset mortgages are a kind of mortgage commonly used in the United Kingdom for the purchase of domestic property. The main principle is the reduction of interest charged by "offsetting" the credit balance against mortgage debt. This can be accomplished through one of two methods: either the lender provides one account for all transactions (often referred to as the current account mortgage) or they make multiple accounts available, allowing the borrower to share money notional to the destination while all accounts offset daily against mortgage debt.
See also
Related transactions
- Collection items
- Draft request
- An account error is required to audit a transaction account
- Transaction deposit
Related account type
- Current account's mortgage
- Negotiate Sequence from Withdrawal account
- Private account
- Savings Account
Note
Source of the article : Wikipedia
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