A Current Account plays a crucial role in managing your business-related finances. Business owners can use this zero-interest-rate bank account for numerous transactions, like withdrawals and deposits, but with a higher or no limit.
It is of utmost importance to be aware of the common mistakes to avoid with your Current Account, which may lead to unnecessary penalties.
Choosing the wrong account type
Selecting an inappropriate account type could be your big mistake. Banks offer various Current Account options tailored to different business needs. Before opening an account, you need to carefully assess your transaction volume, balance requirements and specific business needs to choose the right fit. It is also important to upgrade when your business grows to take advantage of better services that support your business functions effectively.
Not maintaining the minimum balance
One of the most common Current Account mistakes to avoid is failing to maintain the minimum balance required by your bank. This oversight can lead to hefty penalties and charges. Understand your bank’s minimum balance requirements while you're learning about the various features of your Current Account. For instance, you will have to maintain an average monthly balance of ₹15,000 if you open an Axis Bank Current Account but will get unlimited cash withdrawals and NEFT / RTGS transactions.
Not leveraging digital banking services
With the advent of digital banking, managing your Current Account has become more convenient than ever. However, not utilising these digital tools is a common mistake. Some banks also offer Digital Current Accounts which may be opened in 24 hours in just a few steps. You also benefit from additional services, like 24/7 account management, statement downloads and managing your finances from anywhere.
Overlooking the option of Overdrafts
Overdrafts can save you from any cheque bounces in case of a low balance and protect you from the hefty cheque bounce charges. While occasional Overdrafts help you in efficient cash flow, exceeding your balance can incur hefty interest rates.
Failing to utilise value-added services
Many banks offer value-added services with Current Accounts, such as cash management, trade services and forex facilities. Not leveraging these can mean missing out on opportunities to streamline operations and save money.
Underestimating the importance of updating information
Keeping your Know Your Customer (KYC) information up-to-date is essential to avoid account restrictions or closures. Ensure your documentation is current and promptly inform the bank of any changes in your business structure or contact information. This also ensures you keep your account secure.
Also Read: 5 different types of Current Accounts you must know
Conclusion
Be mindful of these common mistakes in terms of your Current Account and take advantage of the bank's services to effectively manage your finances and avoid unnecessary fees and penalties. Regular monitoring of your account activity and maintaining open communication with your bank can help you stay on top of your financial health.
Open a Current Account with Axis Bank to ensure a hassle-free business banking experience.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision
