Typically the first, standard account that one opens with a bank, to begin with, is the retail banking work horse, the all-pervasive Savings Accounts. Throughout the world, the salaried, the professional and everybody else who park their funds in an account so that they can use it intermittently as and when the need arises, turn to the Savings Account.
In a way these accounts have become the foundation on which our entire retail banking experience rests. Debit card swipes, accessing money from saved funds via ATM and payments into others’ accounts via account transfer that today have become second nature would be impossible without a Savings Account.
Yet when it comes to business transactions the go-to account is, and has always been the Checking Account. Popular as the business man’s account or the business account, the flexibility in transactions that the Checking Account offers makes it indispensable to businesses and people who run these businesses. So what is a Checking Account and why do we need to open one, you may ask?
What is it?
A Checking account, also referred to as Current Account allows you to make payments through cheques and is fundamentally a transactional account. Businesses (or even a sole proprietor for that matter) that make business related payments – frequent, regular or even one-time payments – and want the payments and deposits to be in the form of cheques use Checking Accounts. As a rule they do not earn an interest like the interest earned by a Savings Account, but some arrangements that entail larger deposits sometimes may offer interest.
Why it is better for businesses?
A Savings Account being essentially an account for private usage, traditionally, comes with a lower cash withdrawal limit. A Checking Account on the other hand, being ostensibly for business transactions, usually comes with greater withdrawal limits. Checking Accounts are known for the value they offer, particularly in areas like fund transfers. As business accounts they are known to come with features that are oriented towards business usage.
In Malaysia, banks like Citibank offer extra features with their Checking Accounts that usually don’t fit into the scheme of a regular Checking Account. Features like emergency worldwide cash withdrawal, telegraphic transfer, online e-Chat etc. It is features like these, offered without an added cost that tips the scale in favour of the Checking Account when it comes to business purposes.