Having a bank account that can handle everyday transactions can really ease your small business finances.
When we do banking, there are certain types of bank accounts that are meant for specific purposes only.
It’s important to choose the right bank account as per your requirements.
For instance, using a savings bank account for numerous transactions is not a good idea. It’s meant for saving funds.
For everyday transactions, checking accounts, personal current accounts, and overdraft accounts are some of the bank accounts that you can use.
Now, broadly speaking, all kinds of normal bank accounts—that is, a savings bank account, a personal current account, and a checking account—are some of the accounts that can be used for everyday transactions.
But which type of bank account is best for everyday transactions? That’s our concern. Is there any alternative to using a bank account for daily groceries and utility bill payments?
Let’s explore more on this topic and understand which one is going to give us the best offer.
Top bank accounts for everyday transactions
1. Checking Account:
A checking account is designed in such a way that it can handle daily transactions. You may find this type of bank account in Western countries.
In India, you may find similar bank accounts, such as a personal current account and an overdraft bank account.
All everyday banking transactions, along with Internet banking, ATM cards, Mobile Banking, and chequebook facilities, are available with this account. The account is quite convenient for handling everyday transactions.
One of the best bank accounts to handle your daily transactions. You can expect minimum returns from your deposit as it is specially designed for the purpose of daily use.
2. Overdraft Account:
An overdraft account is another good option if you have a sufficient account balance.
The bank may give you an overdraft limit on a fixed deposit account. You can also set the limit as per your needs.
For instance, if you have a monthly budget for groceries and utility bills of ₹50000, you can get an overdraft account against your fixed deposit account. The sanction limit is usually 90 percent of the deposit’s face value. You get ₹90000 OD limit against your FD of ₹1 lakh.
This OD account can have an unlimited number of transactions. Perfect for everyday use.
If you want, you can get internet banking, an ATM card, mobile banking, a chequebook, etc.
The only thing that matters is that your OD limit has an expiry date, which is required to be renewed if you need to continue using it.
3. Personal Current Account:
A personal current account is something like a checking account. There is no transaction limit that enables you to do an indefinite number of transactions.
The drawback of this account is that, like a checking account, which has a very low interest rate, a personal current bank account will not give you any interest on your deposits.
If required, you can have both a savings bank account and a personal current account in your personal name.
With this option, you may be able to manage saving funds as well as an innumerable number of transactions without any extra cost.
A personal current account has all the banking facilities of a savings bank account. From net banking to ATM cards and the like.
4. Savings Bank Account:
A savings bank account is another bank account that you can use for daily transactions. What may concern you is that some banks levy transaction charges.
Banks usually allow a limited number of transactions per year. If it goes beyond the limit, banks may start charging you.
You can mediate the payments and keep the daily transactions under control.
This would enable you to stop losing funds by paying charges and fees.
Like a checking account, you will get all the banking facilities, such as net banking, mobile banking, ATM card, chequebook, etc.
5. Money Market Account:
You may see a money market bank account in other countries, such as America. This is a high-end savings bank account that requires higher balance maintenance.
You may compare this bank account with the bank account available in India with high balance maintenance. For example, the SBI wealth bank account, Gold and Platinum privilege accounts of ICICI, Gold and Platinum account of HDFC, etc
The money market bank account has all the banking facilities you may think of. Internet banking, mobile banking, a chequebook, and an ATM card.
6. An alternative to using a bank account for daily transactions:
It may surprise you, but you can use prepaid cards to handle your daily payments.
The features of a prepaid card are just like the wallet you have. Load the money and spend it as you like. Nearly all banks have this facility offered to their consumers.
The features of a prepaid card are just the same as those of an ATM or debit card. An ATM, or debit card, is linked to your bank account.
Whatever amount you use, it directly goes out of your bank account. On a prepaid card, you reload the money to use it.
Technical features such as PIN authentication and balance enquiry, are the same as those of ATM cards. What concerns is that banks may levy charges and fees for using the service.
If you are thinking of using a prepaid card, try to understand the terms and conditions of the bank, including the card-issuing fees and other related charges.
Factors to consider when comparing bank accounts
It’s easy to identify which bank to go with. There are some factors that you can check online before visiting the bank.
This will enable you to make a prompt decision without any second thoughts. These factors can be as follows:
- Accessibility of the bank and its customer services and reach out.
- Whether online banking and mobile banking are available with the bank account or not.
- The ease of use, whether net banking and mobile banking are user-friendly or not.
- The interest rates that the bank offers.
- Whether an ATM card and a debit card are available or not.
- Can this account be converted to another normal or privilege account later on?
- The charges and fees the bank levy on this product.
With the above few points, you may be able to identify the bank you would want to open your bank account with effectively.
Out of the types of bank accounts that we have mentioned, a checking account is the best to opt for if you are staying abroad in Western countries.
In India, that would be either a personal current account or an overdraft account, which is great for excessive daily users like us.
Under normal circumstances where people use a few numbers of transactions, a normal savings bank account will serve the purpose. The problem arises when you have a small business running in your name and you do need to transfer funds frequently.