There are two main types of bank accounts: a current (or checking account depending on where you live) and savings accounts. Let’s take a look at current vs. savings accounts!
Current Account
The current account is used for daily expenses (i.e. buying lunch, gas money, and medicine from the pharmacy).
With the current account, it is best to use it for purchases that aren’t too big. As the current account is linked directly to the money that is in your bank account, it is best to keep a limit on how often you use your mada (aka debit) card.
To better understand how you can reach your saving goal and this depends on how much you can save.
| Pros | Cons |
|---|---|
| Used for daily expenses, useful to pay bills. | Some banks may charge a monthly fee for a current account (side note: look for hidden fees). |
| Set up direct deposit for your paycheck and automatic payment for recurring bills. | Depending on the account type, you may have limits on how many transactions you can do in a month. |
| Get easy access to your hard-earned money. | |
| There is a record of your deposits and spending, so you can see where your money is coming from and where it’s going. | |
| Some institutes let you lock your mada card if it’s ever lost or stolen—helping to prevent unauthorized use. |
Savings Account
Banks will usually offer an option for you to open a savings account and deposit money into it. Often, a fixed amount automatically transfers from your current account to your savings account on a specified date.
| Pros | Cons |
|---|---|
| A savings account is a great place to keep the money you don’t want to spend while also earning interest (depending on where you live). | Can sometimes also include fees. |
| A great way to keep money that you don’t need immediately but want to have access to when you do (i.e. rainy day fund, emergency fund). | Depending on the institute, sometimes you have to deposit a minimum amount of money into the savings account to keep it active. |
| May have limits on the number of transfers. |
So… current vs savings account, which one should you pick?
The short answer is well… both! With a current account and a savings account in place, you’ve got a solid foundation to start crushing your money goals.
A current account is a safe, hassle-free alternative to cash that allows you to take care of all your basic transactions. Using a current account can keep you on budget.
And a savings account is like the tamer to your current account qahwah. When you pair them together, you get a really good combo!
Use your savings account to keep the money you don’t want to spend away from your everyday spending money. Transfer money from your current to your savings to build toward your emergency fund.