What is the difference between checking and savings accounts ? You may think that having a checking and savings account is a non-functional or unnecessary banking option. But did you know that you can benefit from both types of accounts – both current and savings? And, understanding the differences between the two will help you decide between having one or the other or the two separately or ask the bank for a hybrid account.
Bank accounts (checking and savings accounts) are basically an arrangement created by banks and financial institutions, plus now credit fintechs to lend money, carry out financial transactions and transfer deposits between accounts or send deposits to such accounts. The purpose of accounts is to be the safest way for anyone to withdraw, transfer or keep
This pledge is supported by the Central Bank of Brazil, which fully guarantees that checks and savings deposits will be exchanged between people who have an account, which is in turn backed up by digital operations by banks, financial institutions, credit unions, associations and credit cooperatives. Let us then see the end of the similarities between checking and savings accounts.
Checking the types of bank accounts
Current bank account
Transactional : Traditional current accounts are transactional accounts, which means that banks expect account holders to take out and often put money into them, there are few restrictions on the time to have an account or the amount that you can make with those transactions.
To help make these transactions as convenient as possible, checking accounts have the ability to make payments with a checkbook, pay bills with debit and credit card accounts, and even use mobile applications for all types of electronic transactions involving services and banking products.
Rate and costs: current accounts are usually charged with fees, charges and costs to use a long list of services released in the account, eg use the overdraft limit for more time than the free period, use the ATM from another bank (24 Hours), exceed the number of transactions associated with each type of monthly package
Interest payments : Most traditional checking accounts do not pay any interest by keeping their money in them, on the contrary, current accounts charge interest and tax rebates such as the IOF in the event that the holder uses the bank’s own money, such as overdraft and pre-approved loans and personal credit.
Long-term investment: Savings accounts are closer to a more transactional form of investment that exists and is known to us. You usually keep a savings account to have banking access to save and save your money, usually for longer periods in the hope the money will not devalue or lose money with inflation.
Save not to spend: the money held in the savings accounts is more difficult to spend, if you do not walk with the account card, of course! Savings accounts usually do not have privileges for checks, credit limits, transfers, but can be used for direct debit, so in many cases you will only use savings accounts to withdraw, transfer and spend on card debt .
Few rates and fees: With savings accounts, banks make money from the spread – which is the difference between the interest rate you pay and the interest rate on the loans they finance with your money. Because of this, and the fact that they do not cost as much as current accounts, banks generally do not charge any fees to have an account, in addition to requesting an initial deposit.
Interest Payments: The current income here in Brazil related savings accounts may not be excellent but may help you accumulate a little more money over time. Our tip is you research the market on other forms of application to ensure you will get better yield rates that leave your money in a savings account.
Why do you need checking and savings accounts?
It is very likely that you have a checking account, after all this is one of the most natural ways that all economically active people maintain a financial life and build financial history, in addition to prepaid and traditional credit cards.
While they are a convenient way to make all sorts of payments, checking accounts are terrible places to try to save or create income. Not only money can be used constantly by the savers themselves in times of trouble, but also to be used for trifles.
And if you’re worried about the hassle of managing multiple checking or savings accounts, it’s easy to figure it out, ask the manager to have your current account saved as well, and with the ability of banks online and via mobile you manage. Having both types of accounts may even allow you to get rid of some fees and interest on the money used from the bank.