Current Accounts are the backbone of any business. It enables them to make transactions in large volume, pay bills, unlimited deposits or withdrawals, and receive payments swiftly and efficiently. All these features help businesses keep their finances organised and manageable. However, despite these advantages of Current Accounts, they typically offer no interest rates.
But why is that? Well, it all comes down to the nature of Current Accounts.
Here’s why you don’t get interest on the Current Account balance
Current Accounts are transactional accounts designed to facilitate regular withdrawals and deposits.
These accounts are majorly used by businesses, merchants, enterprises, and even freelancers for large and frequent transactions, such as payroll, expenses, and bills.
Banks must maintain the infrastructure to facilitate these transactions. Since they have to handle large volumes of transactions, maintain high levels of security, and provide additional services, banks incur a high operational cost for Current Accounts.
The high operational cost and the nature of Current Accounts make it uneconomical for banks to pay interest rates on the balance.
How to earn interest on your Current Account?
Traditional Current Accounts typically do not offer interest-earning options. However, there are some types of Current Accounts that help you earn a little extra cash on your idle funds through the ActivMoney feature.
It is an autosweep facility that combines your Current Account with a fixed deposit. Any amount above the pre-defined threshold limit is automatically converted into a Fixed Deposit, earning higher interest rates while still maintaining liquidity.
The process is simple. Just set a threshold limit, and any amount above that limit is converted into an FD for a tenure of 180 days. The best part? There are absolutely no penalties for premature withdrawal of the FDs created through the Active Moneyfacility.
Thus, you utilise your excess funds in the best possible way and maximise your earning potential while still having liquidity all the time. This facility can easily be activated through your bank’s mobile banking app, no additional Current Account requirements necessary.
How to open an ActivMoneyCurrent Account?
To enjoy the benefits of the ActivMoney facility, you simply need to open a Current Account online with a bank offering this facility. After that, log on to your bank’s website, fill in the form with your personal details, address, and other necessary information, and submit it. After a quick verification process, the bank will open a Current Account and enable the ActivMoney facility, which will help you earn higher interest rates on your idle money.
The entire process is online and the required Current Account opening documentsare listed on the website itself. Such convenience makes it easy to enjoy FD-like interest rates on your Current Account balance!
To wrap up
Earning interest on your Current Account is not common as they are primarily transactional accounts used for day-to-day financial activities. However, the ActivMoney auto sweep facility offers a smart alternative.
It manages idle funds in Current Accounts by sweeping them into a fixed deposit, thus earning more interest. This useful feature ensures that your money is always put to work and grows while still being easily accessible whenever needed. Most importantly, you get access to other useful banking services such as online banking, ATM services, easy fund transfers, and mobile banking.