Savings and Current Accounts: What Are The Differences?
Key points
- What is a Savings Account?
- What is a Current Account?
- Difference Savings Account VS Current Account?
- Who can open a Savings and Current Account?
- Special Features and Benefits for Savings and Current Account?
Confusing, isn’t it? I know that until today most of us including myself still get confused whenever we are at the ATM machine. There’s two options for Savings account and Current Account which happen when you use a non primary bank to withdraw your money. Some people might need help remembering what exactly is meant by each one before withdrawing their money.
So you want to know the difference between a savings and current account? We will go over all of them so that when it comes time at an ATM machine again soon- no confusion can stop you from getting your money out.
What is a Savings Account?
To put it simply, a savings account is an account that encourages you to save while paying interest on your deposits each month. Most of us probably have this account. You can see the interest being paid on your account if you check your bank account each month. In addition, a savings account functions similarly to a current account in that you can deposit and withdraw funds whenever you want as long as you have a debit, charge, or ATM card on you in place of a cheque book. If we look at this, a savings account enables you to access your funds using these services:
- Over-the-counter transactions
- Automatic Teller Machines (ATM) using a debit card
- Interbank-GIRO transfers
- Internet banking for bill payments
Not only that, but those with a monthly income or who work for a salary typically benefit from having a savings account. Additionally, Perbadanan Insurans Deposit Malaysia (PIDM) covers your funds up to RM250,000, so you don’t need to worry about keeping them here. The interest rate on savings accounts, meanwhile, can be very low; it normally ranges from 0.1% per year to 4% per year.
What is a Current Account?
A current account is very similar to a savings account in that you can put money in and take money out whenever you like. However, one significant distinction is that, unlike savings accounts, which do not offer these advantages, current accounts allow you to issue checks as a form of payment. Additionally, compared to savings accounts, current accounts have a greater minimum balance requirement. If we look at this, a current account enables you to access your money using the following services:
- Over-the-counter transactions
- Automatic Teller Machines (ATM) using a debit card
- Interbank-GIRO transfers
- Internet banking for bill payments
Secondly, current accounts are typically appropriate for businesses, including firms, companies, public enterprises, businesspeople, and others who typically have a higher volume of regular transactions with the bank. In addition, the current account offers very little to no profit or return on smaller deposits. Additionally, Perbadanan Insurans Deposit Malaysia (PIDM) has coverage for up to RM250,000 of it.
Difference Savings Account and Current Account?
Below are the differences between Savings Account and Current Account:
| Savings Account | Differences | Current Account |
|---|---|---|
| A savings account that allows deposits and withdrawals at any time while earning interest | Terms | A bank account where money can be deposited and withdrawn whenever you want using a cheque book, an ATM card, and other methods |
| Low interest rates of 0.1% to 4% per year are charged | Interest rate | The interest rate ranges from zero percent to as little as 0.05% per year |
|
Facility |
|
| You can withdraw at anytime you want | Cash withdrawal | You can withdraw at anytime you want |
| Yes, there are fees and charges that apply | Fees and charges | Yes, there are fees and charges that apply |
Who can open a Savings and Current Account?
| Savings Account | Current Account |
|---|---|
|
|
Special Features and Benefits for Savings and Current Account?
Savings Account
When you open a savings account, not only you will be able to save but you can also enjoy the benefits from it, such as:
1. You are capable of managing your finances well
Savings accounts have the benefit of allowing you to effectively manage your finances. where you can keep track of all the transactions that come into and go out of your savings account as well as the interest that has accumulated.
2. For purposes of emergencies
Let’s say you can take money out of your savings account to pay for costs if you have an unexpected emergency. You are aware that you can withdraw funds from your savings account at any moment.
3. Safety is guaranteed
Perhaps Perbadanan Insurans Deposit Berhad (PIDM) will provide you with protection for bank deposits up to RM 250,000 in the event that something bad happens to the bank, such as bankruptcy. Visit this page for further details.
4. Earn Interest while savings
In general, you can still earn money over time even when the interest rate is lower. Even if the interest rate is lower than you had anticipated, at least you are earning interest on your savings.
Current Account
When you open a current account, you will be able to save but you can also enjoy the benefits from it, such as:
1. Enjoy overdraft facility
Up to a predetermined credit limit, an overdraft facility allows you to take more money than is available in your current account. Additionally, it enables for flexible access to fast cash and lowers the likelihood of cheques being returned as unpaid. But keep in mind that even if you can use the overdraft facility, there are additional fees associated with the overdraft amounts.
2. Personal Accident Insurance
You could also get personal accident insurance through your current account. To learn more about this function, please contact the bank representative.
3. Monthly statements
Now that you have access to a free monthly statement that allows you to keep track of all entering and outgoing transactions, you can rest easy.
4. Safety is guaranteed
Perhaps Perbadanan Insurans Deposit Berhad (PIDM) will provide you with protection for bank deposits up to RM 250,000 in the event that something bad happens to the bank, such as bankruptcy. Visit this page for further details.
Verdict
The difference between a savings and a current account is significant, but the two have many similarities. You can enjoy some of the same benefits of each type—namely being able to withdraw money at any time at an ATM or other method. But there will be different aspects that make one thing better than another for a particular individual. Good news? You will always have control over where all your money goes, and this will make things easier for you.
