Current account

• What they are
• Interested parties
• Strengths and drawbacks
• Expenses
• Underlying rules
• Pitfalls

What they are

A bank current account makes it much easier to manage your money: you deposit your money with a bank and the bank looks after it and provides various services, such as direct deposit of your salary or pension, payments, deposits, credit transfers, automatic bill payment, debit card, credit card and cheques. You can deposit or withdraw money at any time.

Payment account

According to the new European rules for protecting payment service users, a current account is a type of payment account. Nowadays consumers are offered a wide range of innovative payment services that are provided when they open a payment account. Unlike current accounts, payment accounts can be managed by operators other than banks, such as the post office (Poste Italiane), electronic money institutions (EMIs) and payment institutions (PIs).

Every current account has an identification code called an IBAN (International Bank Account Number). The IBAN identifies a specific current account and the bank where it is held and makes all domestic and international financial transactions practical and fast.

The most common types of current account are:

• Ordinary account: this is the consumer account, where the costs depend on the number of transactions carried out: the more transactions you perform, the more you spend.
• Packaged current account: this carries a fee that can include other services, such as safe deposit boxes, insurance and asset management. Packaged current accounts are divided into accounts where the fee includes a limited number of free transactions, and accounts where you can carry out an unlimited number of free transactions.
• Basic account: this is for people with limited financial needs and is available to everyone to provide access to essential banking services. It only includes these services:
  • cash withdrawals
  • a debit card
  • direct deposit of your pension or salary
  • paying in cash, personal cheques or bankers' drafts
  • automatic payment of utility bills.

In some cases, banks give discounts and special terms thanks to agreements with certain categories of customers, for whom convention-based accounts are reserved.

Interested parties

Anybody who wants to manage their money securely and easily.

If you're a current account holder, you can give permanent instructions in order to have your salary or pension deposited directly into your account and to make regular and automatic payments, such as for utility bills. You can also give payment instructions via phone banking or online via home banking, without needing to go to your local branch.

Strengths and drawbacks

You can pay in and withdraw money from your account at any time; many transactions can be carried out on the Internet.

There are accounts that suit everyone's needs. This is why, when you choose a current account, it's important to think carefully about what you want so that you can look for products that suit your personal requirements. To have an idea of the most important questions to ask yourself before you choose, look at the Bank of Italy's Guide to the current account. Many banks also offer special current accounts for young people, both students and workers.

You can switch your account and the services attached to it to another bank in 12 working days at the most by means of the portability procedure (for more information click here).

Minors can also have a current account, but they can only use them with their parents or other authorized family members.

A current account is a tool for day-to-day money management and is not specifically designed to accumulate savings, whereas other specific financial instruments are precisely for this purpose (see the 'Saving' and 'Investing' sections).

Expenses

Banks offer current accounts with different features and costs, according to the services that they provide; there are current accounts with a flat-rate management fee and others that charge for every transaction.

There are also regular expenses, such as bank charges, which apply every time the interest and various other charges are calculated, the annual stamp duty, and the postal costs for sending bank statements and obligatory communications.

For consumer accounts (ordinary) the costs depend on the number of transactions made.

Packaged current accounts are divided into accounts with a fee, generally an annual one, for a limited number of free transactions, and accounts where you can make an unlimited number of transactions free of charge.

A basic account has an all-inclusive annual fee, which includes a set number of transactions; there is no fee for some user categories.

We talk about debit interest when a bank asks you to pay for amounts debited that are not covered because you have insufficient funds in your account (for more information on the rules applied for calculating debit interest click here).

We talk about credit interest when a bank pays you an annual equivalent rate (AER) on the positive balance of your current account.

Underlying rules

When you choose, as a current account holder you have the right to receive and keep an Information Sheet free of charge, which shows the characteristics and costs of the current account and the associated services as well as a complete copy of the contract and/or the Account Disclosure Statement, before concluding the contract and with no commitment for either party. During the contractual relationship, you have the right to receive:

• a bank statement once a year;
• proposals for any unilateral change to be made to the contract (this is generally provided for in the contract itself), for which you must be given at least two months' notice; you can reject a proposal, which must also give a reason that justifies the change, by withdrawing from the contract.

A current account contract must include the fee schedule and the expenses charged to the customer. It's important to read the contract carefully and consider the clauses and conditions before signing it.

If you have a current account, as well as depositing money, you can also use a credit facility granted by the bank (overdraft facility or line of credit).

Pitfalls

People often sign a current account contract without reading it carefully first, because it's too much of an effort to read and understand the various clauses (this is true for all contracts!).

They can't understand and process all the information available, unless they use mental shortcuts that simplify (though only apparently) the decision-making process and help them decide quickly and easily.

To find out more, watch our videos on behavioural traps.