Current Account Or Savings Account Which Is Best For You?

The vast majority of us in the UK have one sort of bank account or another. If you are working usually employers require that you have a bank account so they can pay your wages. Nowadays there are many different types of bank account but there are two basic categories - savings and current.

Current Accounts

A current account is usually defined in the UK as a transactional account. This means that money goes in and out. This is the one we usually get our monthly earnings paid into and the one we use for our day to day expenses.

Usually the rate of interest on the money in a current account is small and can often be nil. However, there are other benefits to compensate. It can be very easy to get hold of your money. You will get a debit card and sometimes a cheque book although these are now in use less and less.

You can set up standing orders and direct debits which means you can pay money into and out of your account automatically and electronically which can help pay bills. In fact many utilities providers prefer to be paid by direct debit as they know the money is coming. It is possible to get an overdraft facility with a current account which means that at the end of the month when funds may be a bit low the bank will allow transactions which are larger than your balance. However, there can be charges associated.

Savings Account

A savings account is just that. We pay money in, sometimes on a regular basis, sometimes when we can afford it or remember. Usually this type of account does not have many withdrawals. The rate of interest on money in savings accounts is usually much higher than that paid on current accounts. Many providers also offer add-on benefits to their accounts, which can include complementary insurance and discounts and offers for retail and leisure. In addition, benefits can include low tax or tax free saving. Some have limits on the number and value of withdrawals which mean you can get much higher interest rates.

If you would like to know more about saving why not ask AnswerBank Business and Finance.