There is usually a bit of excitement about opening a bank account for a first timer until the bank staff hands you a form that requires you to choose the type of account you want to open. Not having any knowledge about how these accounts work might throw you into a state of confusion.
I believe after reading this, you will be able to make swift decisions about the type of Bank account you want to open.
In Nigeria, Current and Savings Account are the most common account types offered by banks but which is best for you? At this point, it is important to know the difference between both accounts and of course their benefits.
A Current Account is designed to facilitate regular or frequent transactions. It’s more suited for individuals who are required to carry out frequent money transfers like businessmen, firms, companies, organizations, public enterprises, etc.
• Current Accounts derive their name from the purpose they are suited for, regular transactions.
• This type of account is more suited for users like firms, companies, public enterprises, businessmen, etc.
• Currents Accounts do not earn any interest due to the fluidity they offer.
• Current Accounts usually do not carry a limit on the number of transactions that can be made.
A Savings Account is an ideal choice for any individual who earns a steady or regular income as salaried employees. It is designed to encourage and promote savings. This type of account is also ideal for those who have any short-term financial goals to meet such as a future vacation, financing a wedding, buying a car etc.
• A Savings Account is designed with the primary purpose to help you save.
• This type of account allows the holder to deposit money as is convenient, on which the holder can earn interest.
• A Savings Account may be opened by an individual or jointly and requires the holder to usually maintain a pre-specified amount as a minimum balance.
• Interest rates earned on Savings Accounts range anywhere between 4% to 6%. These accounts do usually carry the facility of issuing cheques.
Difference between Current and Savings
Unlike the Current Account, a Savings Account is designed to preserve money to help you save them for something important and even earn some interest depending on the bank. Another difference is that Current account balance cannot be withdrawn up to zero. Current Accounts have an end date after which they can be renewed by the owner. Saving Accounts have no end day. Only the client can request to close it.
Which Bank Account should you open?
There’s no exact recipe you can follow when it comes to choosing a bank account. All you need is to identify which one carters for your financial management needs and go with it.