In banking terminology, the term transaction account refers to a basic bank account with a financial institution which allows for the efficient transfer of funds by the account holder to third parties as well as receiving electronic payments into this account. The most common form of transaction account is a normal bank checking account and in Australia is also known as an everyday account.
For example, a transaction account generally allows the account holder to make payments to third parties through checks, wire transfers, debit card payments, drafts or online transfers. A transaction account can be any checking or similar type of account including:Automatic Transfer Service or ATS accounts, demand deposit accounts, Negotiable Order of Withdrawal or NOW accounts and credit union share draft accounts,to name a few.A Transaction Account is generally opened for the convenience of making third party payments, so in many cases, it does not earn interest. Some banks and financial institutions even charge a nominal monthly fee for holding these accounts.