Savings and current accounts are the two most popular accounts Nigerian banks offer its customers. In this article, we will be telling you about the difference between the savings and the current account.
These two accounts have their benefits of savings and current account in Nigerian financial institutions. These two alternatives fulfil two different financial needs
When choosing a bank account, be it for your business or for individual use, it is important to know the difference between the two accounts.
A savings account is a bank account which one opens for the sole purpose of saving their money. With a savings account, the money deposited will earn some interest on your balance.
The interest you get is determined by the amount you have deposited in the account and certain conditions like maximum withdrawals made in a month.
For example, for some banks, some savings account are not supposed to withdraw more than two to three times to enjoy the interest rate for that month.
Therefore, it will not be wrong to say that a savings account is arguably, the best choice for an individual who earns a regular income and wants to save.
Moreover, it is ideal for SMEs who can consider it an option to save their profits.
Also, those who want to save up for their wedding expenses, vacations, or even want to purchase a house or a car could take advantage of the savings account to help them bring their dreams into reality.
It is an easy way to manage your extra finances and multiply your income. There is only a limited transaction allowance per month.
Current account The name of this type speaks for itself as well. Such accounts are usually created by small businesses, public people, companies, and individuals who need to use bank transactions.
It doesn’t mean the transactions have to be regular ones. Frequent operations with money would also work. Such accounts are flexible. Money comes and go.
A person who has such a bank account can work at a company or be a businessperson whose number of transactions through the current account is not limited to a particular figure.
This account comes with a cheque book and an unlimited amount of daily withdrawal.
Difference between savings and current account
There are a number of differences which a bank user should take cognisance of before opening a bank account.
One of the differences between current and savings account is that a savings account is designed to save money. While a current account is one where you deposit money to carry out business transactions.
Saving accounts enables you to you save up for something important as we mentioned earlier or for an emergency while current account is suitable for business enterprises and firms that make regular transactions.
While an account holder deposits their money in a savings account, it earns some interest depending on the bank. On the other hand, with a current account, banks generally do not provide interest on deposits.
With a current account, there is no restriction on the number of deposits and withdrawal made. Since there is no restriction, the bank makes the charges according to the number of transactions.
In the savings account, there is also no restriction on the number of deposits that is made into the account. However, there is a limited number of withdrawals.
If one exceeds the withdrawal limit, then for subsequent withdrawals, charges apply
Unlike the current account balance, the savings account balance can be low. But the balance in a current account has to be high.
Duration of account
There is an end date for Current accounts. Once it gets to the end date, the owner has to renew the account. While saving accounts have no end day. Only the client can request to close it.
It is pertinent to note that both these accounts have their own set of benefits and drawbacks.
So it is up to the account holder to decide which account is best for them. The decision should be made based on their account needs and we hope this article was helpful.