Difference Between Current and Savings Account – These two terms are perhaps the most popular in the Nigerian banking circle, but the amazing thing is that many do not know the meaning of any of these two account forms, and since they do not know the meanings they cannot tell the difference between them. Many people go to banks and tell bank workers they want to open an account, and all they know is they filled a form, and they started receiving alerts from the bank in a short while.
In this article, we will demystify the meaning of savings and current accounts, the benefits attached to each of them as well as the best fit for each of them.
Savings Accounts
A savings account, just as the name sounds is an account best suited for saving money. A savings account intends to help people save some money, and so, all the accompanying factors of a savings account are designed to help people save more.
A savings account is more suited for personal use because there are a few limitations that surround its use. Savings account are quite easy to open. In many banks, a savings account can be opened within days of the application to set the account up. The documents required to set the savings account up are not so stringent as most times, the primary document required is just a proof of identity.
The savings account can be ready to use within just a few days after the application for its opening is filled. It takes only a minimal amount of money to open a savings account. Some banks allow savings account to be opened without any money at all. The reason for this is because the account is designed to help people save, and savings generally come in small chunks. The savings account is quite the account offer personal use because asides the cat that it helps an individual get disciplined with spending; it also earns interest on saved amounts per month.
Savings accounts apply to many in our society. Students, professional of various genres, and other individuals are the best fit for the use of savings accounts. Some organizations also use savings accounts for the running of their operations (this is not advisable for large companies, however).
Many times, there is a limit to the amount of transaction you can perform with a savings account, and this is why it is the best fit for large organizations who need to engage many substantial financial transactions. Many companies pay the salary of their staff into a savings account, and so saving accounts are sometimes used as salary accounts.
Savings accounts come with some material which allows for the easy access of the funds of the account holder at any time. Savings accounts come with ATM debit cards with which the account holder can withdraw funds anywhere, and now with the inception of ATM payments, people can also save into their saving account with their ATMs. Savings accounts, however, do not come with a cheque book. Savings accounts do not allow third-party access to the account.
Current Accounts
A current account draws its name from the word current, and it means it is an account that is best suited for consistent transactions. Current accounts are not designed to help save, they are more suited for regular transactions and financial engagements. All the factors that come with a current account are designed to help the user of the account engage in a lot of transactions (and sometimes weighty ones too).
Because of the purpose for which it is designed, a current account is a name that is more common in the financial circle of organizations and industries. Current accounts are more suited for the use of these because they engage in a lot of financial transactions almost daily.
The process of salary payment of some industries can be a very tedious one, and if the proper account is not engaged, there may be hitches in the salary disbursement of its staff. All these are why a current account is the better option for industries and large organizations.
Setting up a current account is also easy, although it requires more than a savings account in terms of verification. A current account can have more than one signatory, and this is an added advantage because a double signature can process payments. The signatory process of current accounts is another aspect of these accounts that will take a lot to write about their applications. However, it is possible to have even up to three or four signatories per current account. The organization can tell the bank to allow payments to be processed on the approval of any two of the signature. Some organizations set one of the signatories as the primary signatory of the account, and tell banks not to process payments until the signature of the primary signatory is signified on the payment order.
Current accounts come with a cheque book with which the account holder can process payments without having to go to the bank and make a withdrawal himself/ herself. The availability of cheque books with the use of current accounts makes current accounts a perfect fit also for people who intend to send payments without having to get to the bank. The availability of a cheque book is one of the advantages which a current account has over a saving account which does not allow any third party access to the account. Asides this, a current account has no limits to the number of transactions that can be performed on it, because it is designed to accommodate many transactions.
Unlike savings accounts, a current account does not earn interest.
Conclusion
Deciding which of these account options is best for you should not be hard in the light of the points listed above. As a rule of thumbs (although there are exceptions) a savings account is best for personal use, while a current account is the best fit for companies and organizations.
If, however, you are one that’s very busy and need to make payments consistently, a current account may serve you better than a savings account.