What are Cheque accounts?
Cheques are not being used for daily necessities as it was a decade ago. Lucky for us (and trees) electronic banking made it’s way into our lives. Basically, a cheque account is just one of the steps. Most banks require a cheque account to be opened first in order for a credit card to be obtained. And, like a credit card, cheque accounts can also offer an overdraft facility as well as travel insurance, garage cards etc. In most cases, cheque accounts have lower bank charges on transactions than savings accounts do - this depends on the facilities used within the account. If you use more you will pay more.
Cheque or Savings?
Both cheque and savings accounts are considered transactional and are used to swipe for purchases and do online banking. Even though they both have the same basic functions they have fundamental differences.
Cheque/transaction accounts focus primarily on transactions which makes it a whole lot easier to do payments if your salary is already paid into the account that is solely designed for transactions. Most banks come with a fixed monthly transaction fee option. (That’s why it is cheaper to do transactions within a cheque account).
A savings account is also known as a deposit account. By using this account, you can save money and earn interest on it, at the same time. Deposit accounts are also flexible and very user friendly, however, most banks offer much higher transaction fees on this account.
Pro's of a cheque account
Cheque accounts are created for convenience. A cheque account eliminates the need to carry cash and with online banking, it makes payments easier. Cheque accounts are the most user friendly accounts offered by banks today, offering a wide variety of debit cards and different different cheque accounts to suit any users’ need, making it easy to do banking for everyone.
You get a piece of the cake
Most banks offer reward systems when banking with a cheque account. Rewards points can stretch from groceries to haircuts. There are banks that offer cash back on certain purchases as well as the amount of purchases made with your debit card. Who would want to miss out on extras?
Safer than cash
Let's face it, cash is not king anymore. When it comes to safety, carrying cash is the last resort. Cheque accounts have made it simple and efficient to make purchases with a simple swipe. All cheque accounts today are PIN protected and can be frozen in case of theft.
Con’s of a cheque account
Or, as some banks call them - maintenance fees. This fee occurs when a withdrawal is made that exceeds an individual's available balance. While overdraft can be extremely helpful in those tight times, these fees are sneaky and in most cases higher interest rates apply. Overdraft fees can be unexpected to the account holder as banks or ATMs allow cash withdrawals despite the unavailability of funds.
Basics on how to avoid overdraft fees:
- Don’t use the credit option on your debit card.
- Opt out of overdraft protection.
- Get alerts when your account dips below a certain amount.