We explain what a checking account is, what it is for and the requirements to have one. Also, its difference with a savings account.
What is a checking account?
It is known as a current account (abbreviated: account cte.) to a banking contract which allows the account holder to deposit funds and dispose of them effectively, through various products such as checkbooks, checks, ATMs, bank windows or electronic transfers, but at the same time it does not generate any type of interest in favor of his person.
A checking account allows the user to use their money, buy, pay taxes and make payments for other types of services from the bank itself, being their main income account.
Debit cards, credit cards, electronic wallets and other products are usually associated with it. Usually, when a loan is contracted, its installments are paid through deductions from a checking account.
To open a checking account Various requirements are usually required, usually greater than a simple savings account, such as salary verifications, credit record reviews, etc. AND often the financial institution requires a minimum opening amount when not a minimum balance (to avoid paying maintenance amount).
In some countries, such as Argentina, the current account is understood differently: as a line of credit opened in favor of the client, which can be used up to a maximum amount, as long as they pay what is owed the following month without fail.
See also: Bank credit
What is a checking account for?
As mentioned, a checking account It is a tool to more quickly dispose of the money received which is usually accompanied by instruments such as checkbooks or credit cards.
Since a checking account does not generate interest in favor of the user is usually understood not as a deposit of savings, but of money intended for daily use, that is, an account in which money will enter and leave regularly, from which loans, taxes, etc. will be deducted.
Difference between checking account and savings account
Savings accounts, unlike checking accounts, are simpler financial instruments: bank deposits in which money is deposited that will be little mobilized (or less than in the current, at least), and therefore destined to grow.
Because they have a simpler process than a checking account, savings accounts do not accept financial instruments such as credit cards or checkbooks (usually only a debit card) since Its purpose is the accumulation of capital ; For that same reason, they generate a certain monthly percentage of interest in favor of the owner, deposited at the end of the month in the account itself.
