12 Tips for Optimising the Use of Your Current Account - 1
Get Best Value and Avoid Paying Through Your Nose.

Once you have an account relationship with a bank, you are likely to end up sooner or later with a current account too. The current account is more like the star account in banks, largely because it is very useful as an operational account - one through which you process most transactions. Transactions can equally be done through a saving account, but banks generally frown at excessive activity in a savings account and sometimes penalise it with denial of interest.

A current account is also called a checking account (US convention), because it gives access to a cheque book. You are also allowed to lodge cheques into it for clearing. Part of why it has the image of sa superior account is because it requires slightly more stringent conditions to open one. Such conditions include your proper identification and references from people already accepted to operate current accounts in any bank and who are attested to, by the bank, as doing so satisfactorily. It's such scrutiny that also qualifies you, prema facie, for taking advances from the bank.

Unfortunately, a current account is generally not interest-bearing. Some interest-paying ones exist in some banks, as special products, on unique terms. Also, the current account, in Nigeria and most other places, gets charged an operational fee. These factors obviously have implications for cost and earnings, which are important to you, whether it's a business or personal account. How do you optimise the operation of your account to ensure the best value, in terms of earnings you derive, how you minimise cost, the flexibility of operation and the security of your account. Here are some tips that should be of value:

• Earn from your balances. The current account serves best as your operational account, especially for major transactions that you should keep a trail of by issuing a crossed cheque. Like any facility however, it has its shortcomings. The fact of non-payment of interest on balances is certainly one. Much of what counts here is the volume of float (credit balances) that the account generates. You need to address the revenue implications because, over the long term, that could amount to a lot of lost income. Scout for an account that pays interest and see if you find one that you like its terms.
  
  Beyond that, you need to be prepared, too, to operate more than this account, if you want the flexibility to optimise income. While a savings account may be helpful if you want to steadily build some savings, a call account will be used to manage short-term account balances, when needed. Don't let your funds lie idle and sterile in a current account. A fixed deposit may also play a role in a period of transaction slack that could leave a sizeable chunk of money in your for an extended time-frame. The aim is to see that any account balance not immediately required for transaction purposes is put where it earns interest optimal interest. While you may not open several accounts at once, you need to learn how and when to move funds between diiferent account types so as to achieve the best revenue inflow from funds in the bank.
• Auto-sweep excess balances. One way to gain full control of those running balances in your account is by arranging to auto-sweep them to, say, a call account. That arrangement is not expected to be difficult to put into effect and only requires opening the account and submitting a written request to the bank to automate such transfers from a certain balance threshold. You could ask, for instance, for balances in excess of N150,000 to be swept to your call account, which is interest-bearing. What that means is that each time your balance goes above that figure, say to N400,000, the excess (N250,000) moves to your call account. The N150,000 in the account will be retained to meet immediate payment requirements. You should support this with a complementary instruction to the bank to automatically transfer back to the current account, any amount required to pay a cheque on your account, if the latter is not sufficiently funded. What that means is that there will be no ground to dishonour your cheque, if you have adequate funding in the call account.
  
  The downside here is that you need to plan your figure well to avoid unweildy movements between the accounts. That will possibly irritate your banker as well as create more reconcilliation work for you. So, set the limits at a level that reasonably accomodates you average operational outflows.

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