What is a current account? Everything you need to know about this safe and flexible form of investment

What is a current account? Everything you need to know about this safe and flexible form of investment

What is a current account?

A current account is a form of investment that allows private individuals and companies to invest money safely and flexibly. This is a special account at a bank that, unlike a checking account, is not used to process payment transactions, but is used purely as an investment instrument.

How does a current account work?

Account opening and deposit

A current account is usually opened online or in a bank branch. Once the account holder has been successfully identified, both individuals and companies can deposit money into the account. The deposit can be made either by transfer from the checking account or in cash at a bank counter. There is usually no minimum deposit for a money market account, which makes it attractive for many investors.

Interest rates and availability

A key feature of a current account is interest. The bank pays the account holder a certain interest on the deposited credit. These interest rates may vary from bank to bank and may also change over time. The interest is usually credited monthly or annually.

Another advantage of a current account is the flexible availability of the credit. Unlike long-term forms of investment such as fixed-term deposits or savings bonds, the account holder can access their money at any time. There is usually no notice period or blocking period.

Security of the current account

The security of the money invested is a crucial criterion for many investors. A call money account is usually protected by deposit insurance. This guarantees that in the event of the bank going bankrupt, the account holder's assets are protected up to a certain amount. The exact amount of deposit insurance may vary depending on the country. In Germany, the statutory deposit insurance is currently 100,000 euros per customer and bank.

It's important to note that a money market account is not the same as a checking account. While a checking account is usually protected by statutory deposit insurance, a current account does not offer such a protection function in the event of the bank's insolvency. For this reason, it is important to check the bank's credit rating before opening a current account and, if necessary, choose a bank with a high credit rating.

Advantages of a current account

A current account offers a variety of advantages compared to other forms of investment:

Security

A call money account is considered a safe form of investment because the invested funds are usually protected by deposit insurance. This offers investors a certain level of security in the event of bank insolvency.

flexibility

A current account offers a high level of flexibility. The account holder can access their money at any time and make deposits and withdrawals without any problems. As a rule, there are no notice periods or blocking periods.

Attractive interest rate

Compared to classic savings accounts or current accounts, daily money accounts usually offer more attractive interest rates. The amount of interest can vary from bank to bank and often depends on the amount invested.

Low risk

Since daily money accounts are generally low-risk, they are a good alternative to riskier forms of investment such as stocks or investment funds. They offer a good opportunity to invest money safely and receive a decent interest rate.

Frequently asked questions

Can I open multiple current account accounts?

Yes, it is possible to open multiple current account accounts at different banks. This can be useful in order to spread the invested capital widely and to benefit from different interest rates and conditions.

Is the interest on current account accounts taxable?

Yes, interest income on current account accounts is subject to withholding tax. The bank usually pays the taxes automatically and sends them to the tax office. However, there is a tax allowance that depends on individual tax liability.

How safe is a current account?

Call money accounts are considered safe because the funds invested are usually protected by deposit insurance. However, it is important to check the bank's creditworthiness before opening a money market account to minimize the risk of bank insolvency.

Conclusion

A current account is a safe and flexible form of investment that allows private individuals and companies to invest money safely and flexibly. It offers an attractive interest rate and a high level of flexibility in the disposal of the invested capital. However, you should check the creditworthiness of the bank and keep an eye on the tax situation. Overall, a current account is a recommended option for investors who want to invest their money safely and flexibly.