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ECHOnigeria Forum / Naija Info / Choosing between current and savings account (1 Post | 413 Views)
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Choosing between current and savings account by Folake(f) : 12:23 am |
Nike Popoola Perhaps you think having a savings account is a nice, but unnecessary, banking option, you need to know the importance of a current and savings account and why you need both, according to http://www.bankrate.com. Current and savings accounts are basically an arrangement to lend money to a bank in the form of deposits, which they promise to keep safe until you withdraw or spend it. Current accounts are transactional accounts, meaning banks expect account holders to take out money, with few restrictions on the timing or amount of those transactions. To help make those transactions as convenient as possible, current accounts typically come with the ability to make payments with a chequebook, debit card and even mobile apps. Typically paid for by fees Current accounts usually carry fees for a long list of services or account holder missteps, such as not carrying a high enough balance, using another bank’s Automated Teller Machine or for covering an overdraft. Banks can’t count on your money staying in current accounts very long, so they have to hold a greater amount of your money in reserve than they would for a savings account, and they can’t lend it out. Instead, they make money on current accounts through fees. Keeping a close eye on many transactions incurs administrative costs for the banks.  No interest payments Most current accounts don’t pay any interest to account holders, no matter how much is in the account. Limited transactions: Some banks may limit the number of transactions that savings account holders are allowed to make.  Savings accounts Savings accounts are closer to a form of investment than a transactional account. You are giving a bank access to your cash, typically for longer periods than with current, so they can loan out almost all of it to earn a return. Harder to spend By design, money contained in savings accounts is hard to spend directly. Savings accounts typically don’t have cheque-writing privileges or debit cards attached to them, so in many cases, you will need to withdraw or transfer it before you spend it. Few fees: With savings accounts, banks make money off the “spread†– the difference between the interest rate they pay you and the interest rate on the loans they fund with your money. Because of that, and the fact that they don’t cost as much as current accounts to administer, banks typically charge little, if any, fees on savings accounts. Pays interest Yields on savings accounts may not be great, but they may be able to help you accumulate a little more cash over time. Why you need both It is very likely you have a current account. While they are a convenient way to pay for things, current accounts are terrible places to save. Not only can savers themselves draw out money quickly in moments of weakness. Easy to have both If you are worried about the hassle of managing multiple accounts, it is easier than ever, with the ability to bank online and via mobile, says Jeff Blyskal, senior editor at Consumer Reports. Having two accounts can even allow you to dodge current fees in some cases. “Especially now when it’s so easy with mobile banking, at the same bank, you can have several different accounts, and you can probably arrange it in a way that you are not paying too many fees with direct deposit and such,†Blyskal says. Copyright PUNCH.              Contact: [email protected]  source: http://ift.tt/2fPSB89 http://ift.tt/eA8V8J
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