A bank account is one of the essential tools in business and financial transactions. You cannot carry out most financial transactions without an account; so it is almost impossible to buy and sell or receive and pay for things. In this article, we will provide information on bank accounts, and two major types of accounts; savings and current.
What is a bank account?
A bank account can be said to be a financial account handled by financial institutions such as banks. Bank accounts are used to record financial transactions between the financial institution and the customer. Deposits can be made into the bank account, as well as withdrawals.
A bank account also offers other services; such as eligibility to apply for an overdraft or a loan. There are two main types of bank account, and they are savings accounts and current accounts.
What is a savings account?
A savings account is simply a type of bank account that you operate with a bank on a savings basis. In other words, you put in money, saving it and earning interests on that money.
What is a current account?
A current account is an account that one uses for business transactions. As the name implies, it’s an ongoing account and operates on a day-to-day basis.
What are the differences between savings and current account?
There are many distinct differences between both accounts. We categorise the most fundamental differences into four characteristics. They are:
A savings account is meant for savings. We usually leave deposits in this account there for some time, only withdrawn when needed. We use the current account for carrying out business transactions frequently.
Who it is meant for:
The operator or owner of the account is a prominent characteristic in determining what the account is like. It is what determines if the account will be a savings account or a current account. You open a savings account if you’re looking to use it for savings. The savings could be for a wide range of reasons; an education fund or for a future trip. companies into business, or individuals who want to carry out business transactions open current account
- Minimum balance in the account: Savings accounts usually have a lower minimum balance. That means the amount required to keep them active is smaller than usual. Most banks in Nigeria maintain that savings accounts should have a minimum of N1,000. Current accounts in Nigerian banks, on the other hand, have a minimum balance ranging from N5,000 to N10,000, whereas some do not require a minimum balance at all. In general, current accounts have a higher minimum balance than a savings account.
- Interest rate: a savings account earns a steady interest rate on the amount. Current accounts do not earn interests, however.
Choosing which of these accounts you want to open and operate all depends on what you require it for. Whatever it is, you’ll find either Suitable.