Do you know the difference between a savings account and a current account?
I (It’s Efe here 👋) asked my family this, and it seems the consensus is, a current account is supposed to be the one you use for your daily transactions, so you get charged by the banks to help you hold on to your money because they can’t really use that money to trade, while a savings account is the one you keep your money in for a later date.
Now, if this is true, it means all of us have been using our accounts wrong, especially the savings account. Are you curious as to what the difference between these two accounts is, and what their advantages for you are? If you are, let’s dive in.
What is a savings account?
A savings account is one that allows you to save money usually to be used in the medium term. A savings account gives modest interest rates on savings and can be used to save for things like house rent, school fees, building an emergency fund, etc.
For most Nigerian banks, to earn the interest rate promised on your savings account, you need to limit withdrawals on that account to about 2-3 times a month. This makes sense, considering that the aim of the account is to help you save money towards a goal.
However, this savings account format doesn’t take into consideration the fact that emergencies happen. This is where FairMoney’s savings accounts come in. FairMoney’s savings account helps you make money every day and gives you limitless access to your money in case of any emergency.
There are 2 types of savings accounts. FairLock and FairSave. When you want to wave off spending temptations and save for a goal, FairLock is exactly what you need. It helps you hit your goals, and it gives up to 18% interest P.A. When you are saving towards miscellaneous things, FairSave is what you need. Accessing your money is easy and you get to earn 10% interest P.A.
What is a current account?
A current account is one that allows unlimited inflows and outflows. It’s flexible and can be accessed via cheques, ATM cards, bank apps, and any other method an account can be accessed.
The main thing that differentiates a current account from a savings account is for current accounts, you pay the bank to run it and for savings accounts, the bank pays you in form of interest as long as you do not withdraw too many times.
Current accounts can be business accounts, individual accounts, joint accounts. What differentiates these accounts is how the entity that opens it decides to operate it and the peculiarities regarding who can access it, withdrawal limits, etc.
All current accounts are not created equal, because while most banks charge a fee for giving you free access to your funds, FairMoney does not. You can put money in a FairMoney account without being charged and get 30 free transfers monthly to access your money.
Difference between savings & current account
|Current Account||Savings Account|
|Purpose||Used for day-to-day transactions in your business or personal life.||Used to save for short to medium term.|
|Suitability||A good choice if you perform daily transactions, e.g. business people, companies, etc.||A good choice if you do not perform daily transactions and often need to set money aside, e.g, individuals, salaried professionals, and senior citizens.|
|Interest rates||No interest is provided||Interest is given. The average interest rate for traditional banks is 4%.|
The interest rate for FairSave is 10% P.A., while FairLock is up to 18% P.A.
|Transaction limit||N/A||There are a restricted number of daily transactions.|
Hope it’s clear for you all now. FairMoney provides both account services & you can enjoy specific benefits when you use our app. You can download our app from the Google play store (click this link to download). For more you can refer to the FAQs below. You can also visit our FAQ section in website for more.
- Is it possible to convert my savings account into a current account?
Not at FairMoney. When you open a FairMoney account, you automatically have access to a current account and two types of savings accounts (FairSave & FairLock). You decide how you want to use them.
- What is the required minimum balance for savings and current accounts?
Zero. You can keep as little as zero Naira in your account or 1 billion depending on your account tier.
- How can I open a savings account in FairMoney?
Please download the app here, sign up and click “Access savings” once you are logged in.
- How can I open a current account in FairMoney?
Please download the app here, sign up and viola, you have a current account.
- How can I get my FairMoney account number?
To get your FairMoney account number, simply log in, and click “View account details” on the home page. Your account number is for your current account. Your savings wallet/account is funded through it.