WHICH IS BETTER FOR YOU: A SAVINGS ACCOUNT OR A CURRENT ACCOUNT?

written by Imo David

In this region of the world, we normally don't pay attention to the various types of accounts available to us. We all assume that a savings account is only for saves and that a current account is only for those with a lot of money. But, to be honest, there's more to these stories than you realize. Let's talk about that for a minute. Should we?

Current Account

A current account is a deposit account that allows withdrawals and deposits at a financial institution. This account is extremely liquid and can be accessed via cheques, automated teller machines (ATMs), and electronic debits, among other methods. A current account varies from other types of accounts in that it allows for multiple withdrawals and unrestricted deposits, whereas savings accounts may limit both. Business accounts, student accounts, and joint accounts are all examples of current accounts.

Account for Savings

A savings account is a bank deposit account that earns interest. This sort of account often yields a low rate of interest and is an excellent choice for storing funds for short-term needs. Savings accounts have some restrictions on how frequently you can withdraw funds, but they generally provide flexibility that's ideal for building an emergency fund or saving for goals like rent, school fees, or purchasing a car. Money in this account typically earns interest, the rate of which is regulated by the account type.

What Is the Distinction Between a Savings and a Current Account?

Let's compare savings and current accounts based on four criteria: compatibility for intended use, interest receivable, overdraft protection, and minimum balance.

1. Compatibility: A savings account is best suited to people who are salaried, have a monthly income, and want to save money. Current accounts, on the other hand, are ideal for individuals, business owners, and entrepreneurs who require frequent access to their funds. Current accounts are ideal for transactions that occur frequently.

2. Interest Rate: Savings accounts earn one-figure interest rates depending on the type of savings account, whereas current accounts do not. A current account is a deposit account that does not pay interest. Banks offer interest on savings accounts to encourage customers to save. Because current accounts are focused on money flows, no interest is paid.

3. Overdraft: When you withdraw more money from your account than there is in it, it is said to be overdrawn. Banks do not provide or allow overdraft facilities for savings accounts, but they do provide this facility with a current account. Current account holders have access to overdraft facilities to help with any temporary cash flow issues.

4. Minimum balance: Some savings accounts and most current accounts have a minimum balance requirement that must be met. The minimum balance required to maintain a savings account is typically low (1000-2000) or waived depending on the financial institution, whereas the minimum balance required to maintain a current account is significantly higher.

There are various benefits to owning one or both types of accounts; the categories explained above will assist you in determining which account is best for your account opening goal.

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ABOUT THE WRITER

Founder & CEO, ipentv.com

Imo David is a Nigeria Young Entrepreneur who is passionate about impacting Lives with Positive Changes. He Believes in the Power of Knowledge and is Dedicated to giving People with the Best Information on to Improve their Lives beyond their Imagination. David is Equally Committed to the General Growth of Young People Across Different Areas of Interest Such as Lifestyle, Career and personal development.

As the Founder and CEO of I PEN MEDIA HOUSE, David Leads and Oversees the General Activities of the Company, Particularly in the Areas of innovation and Media. As a Media Enthusiast, David also occupies the Position of Filmmaker/Producer of I Pen Tv, where he is Responsible for the management of the Media and Tv needs of the Company