When you draw money from the ATM, you’ll always be asked, if you want to take it from your current account or your savings account. Chances are you’ve always selected savings without knowing what current even means. So for the more curious ATM goers, here’s a quick look at what each account is really for.
Savings Account
As its name implies, Savings Account is technically used for savings. That’s where you store money you are saving for emergencies. It accrues an at an annual interest rate of about 0.5% and comes with day to day transaction functions like atm withdrawal, internet banking and debit cards.
In other countries, savings accounts usually come with a limit on the number of transaction per month. But thankfully it doesn’t apply in Singapore.
Bonus: Fixed Deposit
Basically a hardcore version of the Savings Account. It allows you to save at a higher interest rate, however the amount parked in the fixed deposits cannot be touched for a certain period, otherwise, you’ll face a penalty.
Current Account
Most Current Accounts do not accrue any interest (or else negligible) but come with additional transaction features like cheque issuance, overdraft facility and additional phone banking support. A current account is largely associated with business entities and for people dealing in professional capacities such as sole proprietors and freelancers.
Do take note that Current Accounts require “higher maintenance”, you will need to have about minimally $2000 – $3000 in your bank account to avoid imposed fees for falling below the stated minimum.
Reality Check
Let’s face it, savings or current accounts yield interests that are negligible for most of us (who do not have a massive sum in the bank). To protect your money from inflation with better interest rates, look to products such as Multiplier Accounts, Endowment Plans and even your CPF. Read up on forums and get yourself acquainted, your future self will thank you for that!
So there you have it, savings versus current, the most commonly asked ATM question that no one really needs an answer to.