Although it seems a simple matter, in practice many people still end up getting confused about the difference between checking and savings account. This can happen, especially with those who decide to open a bank account for the first time.
Both are bank account options, but with characteristics and distinct benefits. And identifying these differences is very important, as it ends up helping the client to hire the service that best suits their financial management needs.
Therefore, in this article you can check:
- What are the differences between checking and savings accounts ?;
- How do I know if my account is checking or savings?
- What are the fees for maintaining each account ?;
- What is a digital current account ?;
- Checking or savings account: which is more worth keeping?
By knowing more about the profile of each service, you will be able to define which one will be most useful in your day to day, in addition to avoid falling into traps such as the payment of unnecessary fees.
What are the differences between checking and savings accounts?
Although they are two types of bank accounts, there is a difference between current account and savings. In addition to the benefits offered by each one, the intention of how to use each service must also be taken into account when choosing one of the two.
The current account is known to be easily used on a daily basis to carry out the main financial transactions, such as withdrawals and deposits, transfers, bill payments, among other activities.
Anyone over the age of 18 can open a checking account at a bank, always by signing a contract by the customer, as well as by the banking institution. Before opening the account, the bank has the right to ask customers for some proof, such as income and home address, for example.
Savings, on the other hand, are a type of account, whose main objective is the economic reserve and long-term income. It is very popular with UK citizens who want to save money, and is considered a low-risk type of investment.
Opening a savings account at a bank is also very easy, as is its administration. However, unlike the current account, the services available are more limited.
How do I know if my account is checking or savings?
Even though they are already using banking services, many people ask themselves: “How do I know if my account is checking or savings?”. To answer the question, the tip is to identify what benefits are being offered through the service.
To facilitate this identification, we have listed below what resources are found in checking accounts and savings accounts.
The current account is usually used, in general, to receive money and make transactions such as payments, transfers and purchases on debit, for example. For this reason, current account customers are entitled to a debit card offered by the financial institution.
It is possible to carry out transactions with the bank’s current account, over the internet (Internet Banking), at ATMs, 24-hour ATMs and other points of service. The amount and variation of benefits will depend on the type of current account chosen.
According to central bank (BC), the main services offered by banking institutions in a basic checking account are:
- Debit card: enables the customer to make purchases and withdrawals;
- Withdrawals: with a limit of four withdrawals per month;
- Checks: although little used today, check sheets are included in the current account package, with a limit of 10 sheets per month;
- Transfers via DOC (Credit Document) and TED (Electronic Transfer Available): services that allow the transfer of money between banks, within a limit of two transfers between accounts of the same institution, and two transfers between accounts of the same holder;
- Monthly Statement: informative with all the movements of the account in the month, also within the limit of two statements in the period;
- Internet Banking: unlimited consultations with access to the bank’s website or app by means of a password.
Remember that these limits, such as the number of withdrawals and transfers allowed per month, are linked to the simplest current accounts. All banking institutions offer more expanded checking account options to meet the varied interests of their customers.
As a result, many current accounts also qualify for credit card style=”font-weight: 400;”>. However, even if the financial institution offers it, its release is subject to approval by the bank. The customer can apply for a credit card and the bank will do an analysis to release or not the credit.
If the use of the credit card is approved, details such as the credit card limit will also depend on the bank’s internal evaluation. In general, this assessment is based on the customer’s history of relationship with the bank, as well as the value of their income.
The same is true for personal credit. Most banks provide their current account customers with a certain amount of personal credit, which can be used in times of emergency, for example.
It is common for this credit to be offered in the form of an overdraft, or as a personal loan. However, like the credit card, this is a service that depends on the bank’s evaluation of the customer.
Also called a savings account, this modality is often used to save money and, in the long run, still earn a little income on top of that money saved.
This is because savings earn interest on the amount invested, that is, on the money that the customer puts in the savings account. This interest is recorded every 30 days. However, unlike other types of investments, the yields generated by savings are usually low.
The main services offered in a current account are:
- Account movement card: enables the customer to carry out their transactions;
- Withdrawals: with a limit of two withdrawals per month;
- Transfers via DOC (Credit Document) and TED (Electronic Transfer Available): a limit of two transfers between accounts of the same holder;
- Monthly Statement: with a kind of newsletter with all the movements of the account in the month, also within the limit of two statements in the period;
- Internet Banking: unlimited consultations with access through the bank’s website or app by means of the customer’s password.
Although both modalities have their attractions, analyzing the services offered by each one makes it easier to understand the difference between checking and savings accounts.
What are the fees for maintaining each account?
Many people believe that maintaining a checking account necessarily involves paying fees. However, according to Resolution No. 3,919 / 2010, established by the Central Bank in 2008, every UK residents citizen is entitled to a basic checking account without paying fees.
The rule applies to any bank in the country, and only to customers who open the account as individuals. This basic package entitles you to the main services of a checking account, as we have listed above.
For customers who need packages with more services than those offered in the basic model, institutions offer more robust versions of the current account, which may entitle you to more withdrawals, more transfers, etc. However, these special packages have fees, which vary by bank.
Therefore, before opting for a particular package of services from a bank, it is important to analyze all the options available on the market, especially making a comparison in relation to what is offered in the package and what the rates are. In general, the more services the package offers, the more expensive the monthly fee will be.
The ideal is that, when choosing the package of your current account, the customer gets an agreement with the best cost-benefit that meets his needs, and whose fees do not weigh in his pocket. To avoid paying abusive interest, always carefully read the contract provided by the bank before signing it.
In relation to the savings account, the Serasa makes it very clear that it should always be free for the customer. Banks are prohibited from charging any fee or tariff to anyone who has only one savings account.
And digital account, what is it?
For some time, it has been common to come across the term digital account. Which can end up causing some confusion, although the subject is really simple.
A digital account is a much less bureaucratic type of account than the “obligations” required by traditional banks. As the name already delivers, a digital account can be opened and / or closed over the internet, and is fully controlled through applications, without the need to use physical tools, such as an ATM, for example.
In addition to practicality, digital accounts are also attractive because they do not have maintenance fees for many of their services. With this, a digital checking account will have more services offered to the customer than the free basic package of a traditional institution.
According to the Central Bank, there is no specific regulation on digital accounts, so they can be used by customers both as a checking account and a savings account.
In general, a digital account offers a debit card (also with a credit card option), withdrawals, bill payments and transfers to any institution.
Checking or savings account: which is more worth keeping?
After so many specifications about the difference between checking and savings accounts, it is normal to be in doubt about which one is the most advantageous. And the answer is quite simple: it depends on the goals of each person.
For the movement of several transactions throughout the month, especially for paying bills and making deposits and bank transfers, the current account is the most appropriate option. In this case, remember to look for a package that completely meets your needs.
For those who want to create an emergency reserve, or add money for a specific activity, such as a purchase or a trip, the best choice is the savings account. It also allows the customer to redeem the money whenever they want, which allows greater flexibility than other types of investment.
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