Put simply, banks are organizations that provide services for those who want to borrow, save, lend and invest money. Their clients range from individuals to institutions, to governments and central banks.
The most common types of bank accounts are:
- Current accounts: They can also be referred to as a checking accounts. They are the most common transaction accounts in which the account owner usually has access to their money at all times.
- Savings accounts: With these accounts, customers are able to deposit money and earn interest on that money. Banks usually restrict the amount of times a customer is able to withdraw that money. This account is important for those who wish to save some money for an emergency fund or for use in the future.
- Fixed deposit accounts: This is an investment account and a type of savings account in which money is deposited for a stated period of time and a fixed interest rate is paid at the end of that period.
- CDS accounts: This is an account with the Central Bank of Kenya for people who wish to buy and trade securities.
What Type of Bank Account Do You Need?
When you are starting out, the best bank account to get is a current account. This is because it is a convenient account that can cater for a vast majority of needs. A current account offers you the following benefits:
- You can select an account with a debit card and use it to make purchases or withdraw funds at an ATM.
- You can receive and spend money without carrying cash
- You can be able to use online banking platforms to pay bills
The common requirements for opening a current account include:
- National Identification card copy
- Recent passport size picture
- Copy of utility bill
- KRA PIN Number
- Letter of introduction (in some cases)
A well maintained current account is considered an asset towards establishing and maintaining credit with your bank. This is particularly important if you are considering a big purchase and would require a line of credit from your bank. You can also use your current account records to get a better handle on your expenses and income and set a budget.
When you want to open a current account, it would be important to consider the following:
- Ledger and Transaction Fees: It is important to note any fees associated with the bank account you are considering to have. Leger fees are usually charged every month for maintenance and transaction fees are charged every time you use the banking services. These fees can affect your available balance if not closely monitored.
- Future Needs: All you might need now is a simple current account, but later, you will probably need customized services from the bank. The more your financial profile develops the more you will need a bank that can partner with you and cater for that growth.
- Efficiency/Convenience: Make sure whichever bank you choose is convenient, both in terms of its physical branch locations and number of easily-accessible ATMs.