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 checking account (abbreviated: cta. cte.) to a bank contract that allows the account holder to enter funds and dispose of them effectively, through various products such as stubs, checks, ATMs, bank windows or electronic transfers, but at the same time does not generate any type of interest in favor of his person.
A checking account allows the user to dispose of their money, buy, pay taxes and make payments for other types of bank services, being their main income account.
It is usually associated with debit cards, credit cards, electronic wallets and other products. Usually, when you take out a loan, your installments are paid through discounts in a checking account.
To open a checking account There are often various requirements, usually greater than a simple savings account, such as salary checks, credit record reviews, etc. AND often the financial institution requires a minimum opening amount, when not a minimum balance (not to pay 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 it pays what is owed the following month without fail.
What is a checking account for?
As said, a checking account It is a tool to dispose of the money entered more quickly, 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 savings deposit, but money destined 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, they 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 receive financial instruments such as credit cards or checkbooks (usually only a debit card) since its end is the accumulation of capital; For the same reason, they generate a specific monthly percentage of interest in favor of the holder, deposited at the end of the month in the account itself.