If you are considering opening a bank account because you’ve started a new job or because you want to receive and deposit money rather than keeping them stacked in your house, then you need to know the difference between bank account types. In this article, we will be comparing three types of bank accounts, which are current, savings, and business bank accounts. In general, bank accounts will differ in the purpose they serve and money accessibility.
Current Accounts
Current accounts can also be referred to as transactional accounts or checking accounts. They are used for both deposits and withdrawals. You can access your money at any given time via ATMs, traditional and electronic cheques, debit/credit cards, and direct withdrawals at the bank. And you can also deposit money directly or using any other electronic means.
Current accounts are characterized by liquidity. They would normally allow you to make numerous transactions. But apart from this, these bank accounts don’t offer many additional features. Some banks may offer rewards on purchases.
Many options fall under the umbrella of current accounts including, student accounts and joint accounts, which offer similar features.
If you are thinking of opening a bank account that will allow you to make purchases, pay bills online, and make other financial transactions then a basic current account would be a perfect choice.
There are few things to consider when opening such accounts including, minimum deposit and balance requirements, maintenance, and other banking fees.
Savings Accounts
Have you put some money aside for emergencies, or maybe you are saving up for the future? Regardless of your goal, you need to consider opening a savings account to deposit that extra money in.
Savings accounts are designed to hold money that you don’t plan on spending at the present time. The cool trick here is you will gain money by just depositing your money. How? Simply via interest and annual percentage yield, which can vary between different banks.
But unlike current accounts, a savings account can’t be used to make regular transactions, purchases, and pay bills. Actually, some savings accounts won’t allow you to access your money until a designated date that is agreed upon when opening the account.
And even when you can access the account, you will be limited to several withdrawals per month, and if you exceed that number, you will pay a fee. But that shouldn’t stop you from opening a savings account as it has many benefits. With savings accounts, you will have a safe place to keep your money while also gaining more money with no effort. You will be prepared for any emergency, and you can also leverage additional benefits offered by banks, e.g., cashback, discounts from certain stores, and more.
When opening a savings account, you need to take some points into consideration including, minimum balance, number of withdrawals per month, interest rate, and additional fees.
Business Accounts
If you are an employee who receives salary deposits, then you won’t be interested in a business account. But if you are a business owner then opening one is a necessity.
Opening a separate account for your business will help you to separate personal transactions from business ones. Which will help you manage your business’s cash flow and spending, calculate taxes, and measure any earnings or losses in a precise way. Banks will also offer some special conditions on these accounts which facilitate your work.
To choose the best business account, make sure you look carefully into interest rates, charges, and the availability of electronic transactions.
