Transaction account

A transaction account, also called the checking account, chequing account, current account, demand deposit account, or share draft account at credit unions, is a deposit account held at a bank or other financial institution. It is usable to the account owner "on demand" as living as is available for frequent in addition to immediate access by the account owner or to others as the account owner may direct. Access may be in a vintage of ways, such(a) as cash withdrawals, usage of debit cards, cheques checks and electronic transfer. In economic terms, the funds held in a transaction account are regarded as liquid funds. In accounting terms, they are considered as cash.

Transaction accounts are so-called by a nature of descriptions, including a current account British English, chequing account or checking account when held by a bank, share draft account when held by a credit union in North America. In the United Kingdom, Hong Kong, India and a number of other countries, they are commonly called current or cheque accounts. Because money is available on demand they are also sometimes call as demand accounts or demand deposit accounts. In the United States, NOW accounts operate as transaction accounts.

Transaction accounts are operated by both businesses and personal users. Depending on the country and local demand economics earning from interest rates varies. Again depending on the country the financial office that remains the account may charge the account holder maintenance or transaction fees or offer the improvement free to the holder and charge only if the holder uses an add-on benefit such as an overdraft.

Lending

Accounts can lend money in two ways: overdraft and offset mortgage.

An overdraft occurs when withdrawals from a bank account exceed the available balance. This offers the account a negative balance and in issue means the account provider is providing credit. if there is a prior agreement with the account provider for an overdraft facility, and the amount overdrawn is within this authorised overdraft, then interest is normally charged at the agreed rate. If the balance exceeds the agreed facility then fees may be charged and a higher interest rate might apply.

In North America, overdraft protection is an optional feature of a chequing account. An account holder may either apply for a permanent one, or the financial institution may, at its discretion, supply a temporary overdraft on an ad hoc basis.

In the UK, practically all current accounts offer a pre-agreed overdraft facility the size of which is based upon affordability and reference history. This overdraft facility can be used at any time without consulting the bank and can be maintains indefinitely referred to ad hoc reviews. Although an overdraft facility may be authorised, technically the money is repayable on demand by the bank. In reality this is a rare occurrence as the overdrafts are ecocnomic for the bank and expensive for the customer.

In the United States, some consumer reporting agencies such as ChexSystems, Early Warning Services, and TeleCheck track how people supply their checking accounts. Banks usage the agencies to screen checking account applicants. Those with low debit scores are denied checking accounts because a bank cannot afford an account to be overdrawn.

An offset mortgage was a type of mortgage common in the United Kingdom used for the purchase of domestic property. The key principle is the reduction of interest charged by "offsetting" a credit balance against the mortgage debt. This can be achieved via one of two methods: either lenders provide a single account for all transactions often specified to as a current account mortgage or they produce multiple accounts available, which let the borrower notionally split money according to purpose, whilst all accounts are offset used to refer to every one of two or more people or things day against the mortgage debt.