Hong Kong - What's the difference between Current Account and Savings Account here

Question

I know there is already a question called “Savings” account vs. “current” account - what's the difference?" on the site but bear with me, I believe that doesn't answer my doubts.

I know very well what the difference between a "checking account" and a "savings account" is supposed to be in the US - mainly that you are not able to withdraw from a savings account more than 6 times in a month and that a current account doesn't give interests. However I live in Hong Kong now and I've been struggling to find out the difference between "current account" and "savings account" here(and also in Singapore, presumably), since the information on banks' website has been really obscure.. I seem to be able to withdraw for unlimited times from my bank from my savings account(or if there's a limit, I never encountered it), and even the minimum deposit to open an account remains the same for both accounts. It seems to me the only difference is that you're able to write checks for current account, and that the current account doesn't give any interest(even though interest from savings account is also very very little). Is that the case? If so, what's the need for having separate types accounts for an individual anyways.

I'm now trying to learn basic personal finance concepts but it seems that I can't just apply US concepts to Hong Kong straight away, so I'm quite confused. Thanks in advance!

Answer 1

Actually you have pointed out the main differences:

• Interest: Ususally no interest will be paid to current account. (although some banks do.)
• Cheque books: only available for current accounts.

More differences I have noticed, as a local resident, having seperate accounts are more like a convention:

• What I have heard from the seniors: in the past (something like before the 80s and 90s), not everyone could open a current account, you may need a referrer / guarantor to do so.
• Person under the age of 18 cannot write or cash a cheque (as restricted by the Contract Law), so they cannot open a current account and saving account is the only option.

If you open an "integrated account", you usually get both. For those who do not want having seperating accounts, some banks offer 2-in-1 accounts, which the account could get both interest paid and a cheque book.

Answer 2

Savings and Current Accounts have some history. It was essentially a customer segmentation, i.e. to charge less for Savings Account held by Individual and charge more for Current Account typically held by Corporates. There were quite a few initial difference and over the period some have vanished, some are there, there are also variations country to country.

Essentially:

• Limited Withdrawal, typically x a quarter for savings, no such limitations for Current.
• Limited Number of Check books issued. There days more are issued and charged. For premium customers there is no Charge. For current every check book is charged.
• Free Monthly statements for savings, Statements are charged for Current.
• Interest is paid on savings, Typically Zero on Current. However new products are giving some interest on savings.
• Over draft facility not possible on Savings. One can have it on Current with right paperwork.
• Other facility like check / cash collection from door steps etc norm for Current. For savings its not offered, again being offered for high net worth individuals.
• Transaction by walking into Non-Home Bank Branches limited / not allowed for savings, typically a norm for current.

And quite a few such smaller differences. These keep changing over the period from country to country or from Bank to Bank within a country.