Current account

banking

A checking account is a banking contract by which the client makes a deposit with the financial institution. Thus, you can have these funds through the ATM, window, checks, electronic transfers, among others.

That is, the current account corresponds to a bank deposit that the client can use at any time and for different purposes, such as making payments to third parties.

Likewise, it is possible to request that different periodic discounts are automatically made from the current account, such as the payment of taxes or loan installments (direct debit).

The checking account can also be used to receive deposits from the person's salary.

Another point to take into account is that these accounts can be associated with an electronic checkbook or a credit card. Thus, if the user contracts a credit, he can pay it with discounts to his checking account.

Differences between checking account and savings account

The main differences between checking account and savings account are:

  • The current account does not pay an interest rate to the user, unlike the savings account that does guarantee a periodic return, even if it is small.
  • Deposits in a checking account are more mobilized (invested) by the bank, compared to funds in a savings account, since the latter must generate a periodic return to the user.
  • Savings accounts, unlike a checking account, cannot be linked to a credit card or checkbook. It can only be compatible with a debit card.
  • The purpose of the checking account is to have a fund of money for its daily use. Instead, deposits in the savings account seek the preservation and generation of capital.
  • The savings account requires a minimum amount to open and use. Instead, the checking account allows overdrafts. That is, even if there are no funds, transactions can be carried out, functioning as a loan that the user must replace, for example, in fifteen or thirty days.

Example of using the checking account

Taking into account the above, a company could have a checking account to make daily payments and deposit the salary of its workers.

Also, the same company can open a savings account where it will deposit funds that it could use, for example, for investments or future plans.

Difference between credit and debit card

Tags:  passes Business economic-analysis 

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