Nowadays, many South Africans want to switch from the savings account to a cheque account. But what is the difference between a Current Account vs Cheque Account? Why do so many South Africans want to switch? Take a look at the differences and you’ll see why a cheque account is South Africa’s favourite account. (A current account is a type of deposit account that caters to professionals and businessmen alike. For the purpose of this article, a current account will be referring to a savings account).
With a current account, you get the basic banking services with which you can make purchases and withdrawals. You can also access your current account using the bank’s app or online banking services. You’ll also get a standard debit card linked to the current account to withdraw money from an ATM or do your shopping in the shops. Unfortunately, most banks do not allow someone with a current account to do any form of internet purchases. You can, however, do a transfer into an account within South Africa, but will have to wait for the money to clear first before the transaction is done. The name current account is a misnomer. It pays very low interest and in some cases, no interest at all. The interest rate is usually lower than the inflation rate, so your money is losing value in a current account.
In the olden days, one would get a cheque book with a cheque account, but due to electronic banking, chequebooks are a thing of the past. Today, banks love to give a lot of add-ons to a cheque account, such as; unlimited debit/cheque card purchases, unlimited cash withdrawals at Point-of -Sales and, free SMS/email notification. Then there’s also the added value like six free Take Me Home services (to ensures that you arrive home safely after a night out with the added convenience of having your vehicle safely driven home for you) and free lump sum death benefit to the value of R15,000. These are just some of the benefits you get with an Absa Gold Cheque Account.
Both a cheque and current accounts are considered transactional accounts and are used as a debit card to swipe when buying something, withdraw cash or for internet banking. So, if the primary function of both is the same, what then are the differences?
A cheque account was designed for the purpose of doing transactions. Having your salary paid into your cheque account makes it much easier to manage your income because it’s more affordable to make many different transactions. For a monthly fee, cheque accounts come with the benefits you read about above.
A current account works more like a pay-as-you-transact account, in other words, every time you withdraw money or swipe at the shops, you are charged for using your current account. Should your salary be paid into your current account, chances are you’re paying more in banking fees due to debit orders, cash withdrawals, swiping, the internet and cellphone banking services that you use during every month when compared to a cheque account.
With a current account, you receive on balances over a certain amount. The longer you keep the funds in your savings, the more interest will accumulate, so over time you’ll have more money in your savings than what you initially deposited.
With a cheque account, on the other hand, you earn little to no interest on a positive balance. So, you should have your income transferred into your cheque account to perform your various transactions throughout the month and deposit a portion of that money into a current account.