Knowing the details of different account types is extremely important for individuals and businesses alike. One such account that requires keen attention are Current Accounts.
These accounts are often associated with facilitating daily transactions for businesses and hold features like overdraft facilities and quick settlements. However, there is always a question that confuses people, which is whether banks pay interest on funds held in their current account.
Let's take a closer look at the specifics of current accounts and get into the depth of this question.
Understanding current accounts
A current account is a type of bank account used by businesses and entrepreneurs to monitor and manage everyday transactions. Unlike savings accounts, which provide interest and are for saving purposes, current accounts are geared towards other needs and regular transactions such as payments, withdrawals, and deposits.
The Kotak811 Current Account is designed to provide for the evolving needs of businesses in the digital age. This account stands out for its zero balance requirement, and hassle-free online opening process, with a range of features customised to enhance financial management efficiency.
Kotak811 Current Account combines convenience, flexibility, and wealth-building potential, making it a compelling choice for businesses seeking to maximise their interest earnings while efficiently managing their finances.
Do banks pay interest on your current account?
Generally banks do not provide interest on current accounts. However, the Kotak811 Current Account brings a major shift by integrating interest accrual. ActivMoney is an innovative feature that allows businesses to capitalise on their idle funds, potentially earning up to 7%* p.a. interest.
This current account interest rate in Kotak aligns the current account offering more closely with the benefits associated with savings accounts or fixed deposits. The ActivMoney feature automatically transfers excess funds into fixed deposits. This boosts earnings while retaining liquidity.
The combined balance in the Current Account and fixed deposit is available for transactions, with no penalties for premature withdrawals. This feature offers maximum convenience and flexibility, allowing businesses to earn higher returns without daily investment management worries.
By offering interest on idle balances, Kotak811 Current Account helps businesses with an additional avenue for maximising returns on their funds. This enhancement not only adds value to the account but also provides an incentive for businesses to maintain higher balances, effectively optimising their financial resources.
Must Read: Difference Between Current & Savings Account
Why is it beneficial to get interests on current accounts?
Interest on current accounts can offer several benefits to both businesses and individuals:
Extra income
Current accounts typically don't earn interest, but Kotak811 offers interest up to 7%, providing an additional source of income.
Offsetting fees
Interest earned on a current account can help offset account maintenance fees or transaction charges, reducing overall banking costs.
Cash flow management
For businesses, interest on current accounts can contribute to better cash flow management by providing a small return on idle funds held in the account.
Encouraging savings
Even though current accounts are primarily for day-to-day transactions, offering interest can encourage individuals and businesses to keep more funds in their current accounts, rather than transferring them to savings accounts.
Relationship building
Banks offering interest on current accounts can attract and retain customers, fostering long-term relationships by providing an incentive to keep funds within the bank.
Flexibility
Interest on current accounts adds flexibility by allowing account holders to earn a return on their funds without the restrictions typically associated with savings accounts.
Hedging against inflation
While the interest rates on current accounts may not always keep pace with inflation, they can still provide some level of protection against the eroding effects of inflation on the purchasing power of funds held in the account.
Application & activation process of kotak811 current account
Opening a Kotak811 Current Account is easy through the Kotak811 website or mobile app.
Fill out the online application form
Begin your online application form by filling out all the details.
Arrange in-person verification
After form submission, a bank representative will contact you to hold an in-person meeting for verification and further process.
Complete physical verification
The designated bank representative will start the process and authenticate all the details and proceed with your application form.
Authentication of details
Once the physical verification is successful, your provided information will undergo authentication procedures.
Account activation
Upon satisfactory completion of all verifications, your Kotak811 Current Account will be activated and ready for use.
Receive welcome kit
Expect to receive a comprehensive welcome kit, dispatched promptly to your designated business address, providing further details and assistance.
Must Read: Everything You Need To Know About Current Account
Ways to optimise earnings with non-interest current account
Even if your current bank doesn't offer interest on your account, there are still ways to maximise your earnings. Some of them are:
Fee avoidance
Many current accounts come with monthly fees. Make sure you understand the requirements to waive these fees, such as maintaining a minimum balance or setting up direct deposits. Avoiding these fees can save you money in the long run.
Convenient banking
Take advantage of the convenience offered by your bank. Use online banking, mobile apps, and ATMs to manage your account efficiently without incurring unnecessary fees for in-person transactions.
Cashback & rewards
Some current accounts offer cashback or rewards programs. Take advantage of these perks by using your account for everyday spending. Look for opportunities to earn rewards on purchases like groceries, gas, or bills.
Conclusion
While most current accounts typically don't accrue interest, the Kotak811 Current Account introduces a transformative approach by offering up to 7% interest on idle funds. This innovative feature not only provides additional income but also offsets fees, improves cash flow management, and fosters stronger banking relationships.
Despite the norm of non-interest-bearing current accounts, maximising earnings through fee avoidance and leveraging banking conveniences remains essential. With its seamless digital interface and wealth-building potential, it stands as a compelling choice for optimising financial management practices.
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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
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