When you need to open an account, you will be offered two options, and it seems that there is no difference which account to choose. In fact, these accounts imply different functionality. And in order to get the most out of them, you need to know differences between them. When you come to the bank in order to entrust your money to it for a while, you will have two options – a savings account and a checking account.
What is a savings account?
This banking product is fully consistent with its name. These are your savings that you temporarily trust the selected bank. Today, all banks working with private individuals have such products. At the same time, the savings accounts may vary.
For example, in terms of validity, they can work for you from 3 months to 5 years. They can be dollar, currency and multicurrency; with the right to replenish and without it;with the ability to withdraw money when needed (on demand) and without.
Anyone who has documents proving his or her identity can open a savings account. Opening and maintaining a savings account is a free service.
What is a checking account?
This product is often called current, and this word fully characterizes it. It is not just money that you trust the bank. This is the money you use. This is an account that is regularly replenished. The simplest example of a checking account is a payroll card.
Money comes to this account twice a month, you withdraw it when you want. A bank usually charges a commission for servicing such accounts.
What is the difference between a savings account and a checking account?
The purpose of a checking account is to facilitate everyday financial transactions, cashless payments, etc. While a savings account helps you accumulate funds that have not been used for a certain period.
Checking accounts are used by both ordinary citizens and representatives of various kinds of business, while savings accounts are mainly the lot of individuals. A business prefers to invest either in its development or in more profitable instruments.
A savings account allows you to earn a little. Even demand deposits require the accrual of small interest on the balance. A regular checking account does not imply any compensation.
To open a savings account you will need a certain amount, its size will be agreed upon by the terms of the agreement. You can open a checking account without having the funds that you put on it right away.