A current account is essential for businesses, offering seamless transactions, higher withdrawal limits, and overdraft facilities. However, banks impose various charges that can significantly impact account holders. Understanding these fees can help businesses and individuals manage their finances better and avoid unnecessary costs.
Types of Charges on Current Accounts
1. Account Maintenance Charges
Banks levy monthly or quarterly maintenance fees for keeping the account active. Charges vary depending on the bank and type of account. Public sector banks generally have lower fees compared to private banks.
2. Minimum Balance Penalty
Many banks require a minimum balance in current accounts. Failure to maintain it results in penalties, which may range from ₹500 to ₹5,000, depending on the bank.
3. Transaction Charges
Current accounts come with free transactions up to a limit. Exceeding this limit leads to charges such as:
- Cash deposit/withdrawal fees: Some banks charge after a certain limit (e.g., ₹2 per ₹1,000 beyond the free limit).
- NEFT/RTGS/IMPS fees: Charges apply on outward transactions beyond the free quota.
4. Cheque Book and Cheque Bounce Fees
Banks offer a limited number of free cheque books annually. Additional cheque books come with a cost. A cheque bounce due to insufficient funds can attract penalties ranging from ₹250 to ₹750 per instance.
5. Overdraft Charges
Overdraft facilities allow account holders to withdraw beyond their balance, but banks charge interest on the overdrawn amount. Rates vary from 12% to 24% per annum, plus processing fees.
6. Debit Card and Digital Banking Fees
- Annual fees apply to debit cards linked to current accounts.
- Net banking, mobile banking, and SMS alerts may have minimal charges, depending on usage.
7. Foreign Transaction Fees
For businesses with international dealings, foreign exchange markup fees and SWIFT transfer charges can significantly impact costs.
How to Avoid Unnecessary Fees
- Choose the Right Bank: Compare charges across banks before opening an account.
- Maintain Minimum Balance: Avoid penalties by keeping the required balance.
- Optimize Transactions: Use digital transfers efficiently to stay within free limits.
- Negotiate with Banks: Long-term customers can request fee waivers or discounts.
Best Banks for Low-Charge Current Accounts in India
- State Bank of India (SBI): Lower fees for SMEs and startups.
- HDFC Bank & ICICI Bank: Competitive transaction fee structures.
- Kotak Mahindra Bank: Zero-balance current account options.
Final Thoughts
Understanding current account charges can help businesses save money and operate smoothly. Always read the fine print before opening an account and stay updated on fee changes.
Also read: Overdraft Facilities in Current Accounts: How They Work
