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A checking account is a deposit account opened with a bank that allows numerous withdrawals and unlimited deposits. The current account is the most liquid account and can be conveniently accessed at any time via ATMs, checks, online banking, credit or debit cards. Due to its characteristics, the current account is also known as a performance or transaction account.

Many financial institutions offer checking accounts at very low monthly or annual fees and banks traditionally use this service as a loss guide. Loss leader is a marketing term that involves offering a product below its market value in order to attract consumers. When consumers have been attracted to free or inexpensive checking accounts, banks offer them more profitable products such as mortgages, personal loans, investments in life insurance, or pension funds.

Functions of the checking account

Different types of checking accounts have been developed to meet the requirements of the users. These can be student accounts, business accounts and joint accounts for households. As a rule, checking accounts do not offer any interest due to their liquidity.

Current accounts can be easily set up in bank branches for a private person. Businesses may require you to go through a specific process, depending on banking and state regulations. The checking account is one of the most practical solutions to keep your cash available for all transactions such as paying your bills, shopping for goods online and paying with credit or debit card in a store. The demand account is the simplest banking service and is used by almost every bank customer worldwide. This account gives you the freedom and convenience of instant access to your funds with no additional fees, with the exception of transaction fees in some cases.

Some banks offer checking accounts with a certain credit limit that you can use in an emergency. If this is the case with your transactional account, you can rest assured that you will always have extra cash at hand. In the meantime, you should be more careful not to run over your balance without good cause. Typically, this short-term loan is associated with high interest rates. For some people who like to spend all of their cash on hand, a checking account with a line of credit may not be the best option.

Advantages and disadvantages of the current account

While checking accounts are close to cash in terms of liquidity, it is believed that keeping your funds in a bank and accessing them through your transactional account can reduce unnecessary expenses. It's also a great alternative to cash in the event of robbery, loss of your wallet, or other accidents. Instead of losing all of your cash, your money is kept safe in your bank account.


It is hard to imagine getting your paychecks in cash these days, which involves physical receipt after cash has been deposited into your account. It's hard to imagine paying your utilities and other bills. With checking accounts, you can even easily set up recurring payments for mortgages or other recurring payments.

Most banks also offer debit or credit cards tied to your transactional account that allow you to withdraw funds from your account by going to your nearest ATM instead of going to the branch, waiting in line and paying transaction fees. You can also use credit and debit cards to shop, buy airline tickets, and rent a car online. Your credit or debit card information can also be used as a personal identification method for various websites on the Internet.


Overdraft fees and high interest payments are the main disadvantages of using a checking account. Many do not notice when the negative balance has been reached and the interest payments, which can be up to 20%, increase the credit at high speed. Fortunately, as the name suggests, a line of credit only goes with a credit card, while it is impossible to open a line of credit for a debit card. Therefore, when deciding which type of card to choose with your needs account, evaluate your ability to control your spending.

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