We explain what a current account is, what it is for and the requirements to have one. In addition, its difference with a savings account.
What is a checking account?
It is known as a current account (abbreviated: cta. Cte .) To a banking contract that allows the account holder to enter funds and dispose of them effectively, through various products such as checkbooks, 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 current account allows the user to dispose of their money, buy, pay taxes and make payments of other types of services of the bank itself , being its main income account.
It usually associates debit cards, credit cards, electronic purses and other products. Usually, when a loan is contracted, its fees are paid through discounts in a current account.
For the opening of a current account, various requirements are usually required, 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 (to not pay maintenance amount).
In some countries, such as Argentina, a different current account is understood: as an open line of credit in favor of the client, of which you can have up to a maximum amount, as long as you pay what is owed the following month without fail.
What is a current account for?
As has been said, a current account is a tool to dispose more quickly of the money entered , which is usually accompanied by instruments such as checkbooks or credit cards.
Given that a current account does not generate interest in favor of the user , it is usually understood not as a savings deposit, but as money intended for daily use, that is, an account in which money will enter and exit regularly, from which they will discount loans, taxes, etc.
Difference between current account and savings account
Savings accounts, unlike current 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.
For having a simpler process than a current account, savings accounts do not receive financial instruments such as credit cards or checkbooks (usually only a debit card) since their 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.
We explain what savings are and what types of savings exist. Also, why is it important and what are its differences with the investment.
What is the saving?
Saving is the practice of separating a portion of the monthly income of a household, an organization or an individual , in order to accumulate it over time and then allocate it for other purposes, which can be recreational expenses, important and eventual payments , or solve an economic emergency.
Saving is a usual practice and also an important concept in economic theory, understood as the percentage of income or income that is not used for consumption . That is why there are different forms of savings and even financial instruments have been designed whose specific role is to allow or increase the desired savings.
Normally, the saving consists of the surplus of money or resources accrued during the production process , whether national, business, family or personal. However, the excessive desire for savings, sacrificing important or necessary expenses that could be covered, are linked to greed and are very badly viewed culturally.
Its origins as a practice are closely linked to the origin of civilization, prior to the existence of money, so that real goods of the harvest were preserved to consume them later. The first savings and loan society emerged during the fifteenth century , as part of the new order brought by the Bourgeois Revolutions, and was the precursor of the current banks. Savings and the accumulation of capital were key in the constitution of early capitalism as an economic system.
Types of savings
Normally two forms of saving are distinguished: the public and the private.
- The public saving . It is the one that the State performs , based on the income from international trade, taxes on its citizens or other economic activities. When the State saves resources it is because it has covered its basic operating and assistance needs (public spending), and there is still a surplus or excess of resources. Otherwise, we talk about deficit .
- Private savings . It is carried out by private organizations of different types, that is, those that do not belong to the public sphere. Broadly speaking, it is carried out by families , non-profit institutions and companies . This saving occurs when the basic needs of the company or the family are covered in their entirety and there is a surplus of available resources.
Importance of saving
Saving is a vital economic planning activity for the survival of a productive system over time, since it entails the possibility that part of the resources produced are not consumed or squandered, but strategically safeguarded for the future.
That is why savings are encouraged at all levels, since they involve a more sensible and far-sighted use of available resources , which serve to meet future needs or that can be invested in new projects.
What is the investment?
In economic terms, investment is a form of savings and postponement of consumption, which consists of changing the additional resources available for goods whose value does not decrease or even increase over time, such as property, foreign currency, corporate actions or various instruments. financial investments, such as fixed bank terms, for example.
The logic of the investment dictates that money can be exchanged for goods that can then be sold again , or that they can even generate dividends, thus recovering the investment and multiplying the money saved. It is a usual procedure in countries with high inflation rates or currencies in the process of devaluation, since the goods are not affected by the loss of purchasing power that affects money.
Likewise, it is a common form between companies and people with high purchasing power as a form of savings, since the money invested in investment goods can not be consumed daily or in superfluous expenses
No comments:
Post a Comment