Video Transcript – Current Accounts

When you open a bank account and pay money into it (or your employer pays your salary into your account), as a matter of property law the money belongs to the bank not to you. The bank is free to invest them as they choose. You (the depositor/ account holder) have a contractual claim against the bank to pay you back the money. This is as if you have lent the bank money.

So, you are the lender, and the bank is the borrower. Your right to claim back the money depends on the type of account which counts as the terms of the contract between you and the bank. For a current account, you can withdraw all your money at any time (e.g. by electronic bank transfer). You can also make payments out of your current account by debit card, withdraw cash from an ATM, and show up in person at a branch and withdraw cash during business hours.

Current accounts offer this whole range of payment options but do not carry interest. Savings accounts carry interest, but you cannot directly withdraw cash from a savings account or draw funds from it via your debit card. You have to transfer the money from your savings account to your current account first.