A Checking Account (CA) or a Current Account is a type of bank account that allows account holders to deposit, withdraw or transfer funds from this account. Let us look at some of the features and benefits of such accounts and why it is important to have one:
Cheque Facility
Current Accounts provide holders the facility of making payments by cheques. This facility is not available to Savings Account holders. One advantage of making payments by cheques is that these instruments are accepted by banks both in and out of your banking network, e.g. overseas banks.
Overdraft Facility
Many Current Accounts also offer holders Overdraft facilities. An Overdraft is a credit facility that allows the holder of a current account to draw more than what is in the account up to the credit limit allowed by the financial institution. Overdrafts are great when one is in urgent need of cash to meet an emergency or an immediate cashflow requirement or even to invest in an opportunity that can fast disappear.
Withdrawal of Funds
Current Accounts place no or low restrictions on the number of withdrawals and the amount of each withdrawal during a given period like a month.
Guarantee
Under the Perbadanan Insurans Deposit Malaysia (PIDM) deposit insurance system a maximum protection of RM250,000 per depositor per member institution is provided. Current Accounts (both conventional and Islamic) are eligible for this coverage.
All the above benefits make Current Accounts a favourite financial tool for business, professional, corporate and organizational customers, especially those who have a large number of transactions in the form of numerous payments/withdrawals and deposits.
Different types of Current Accounts are available and you can take advantage of the type that suits your requirements best:
Personal Current Accounts – are operated in your name.
Joint Current Accounts – are operated by you jointly with others.
Business Current Accounts – are opened in the name of the business and are operated by the nominated signatory(ies).
Islamic Current Accounts
These accounts are Shariah compliant and are based either on the concept of Wadiah (safekeeping of deposit) and may pay Hiba (literally, “Gift”) in lieu of interest or they may be based on the concept of Mudharabah (profit sharing) where instead of gift/interest account holders receive a share of profits from the capital they have invested in the form of deposit.
Foreign Currency Current Accounts
The liberalization of the Foreign Exchange Administrative Rules on the 01st of April 2005 has led to the popularity of foreign currency accounts. Foreign Currency Current Accounts enable account holders to keep foreign currencies for a number of uses including business, investment, education, travel and holiday, for hedging purposes etc.
Hybrid Current Accounts
These accounts combine features of Savings Accounts (interest paying) along with features of Current Accounts (cheque facility).