Financial institutions are one of the institutions that society really needs today. As an institution that can help maintain and manage many people’s money, this institution has a responsibility to always provide safe and comfortable services and transaction activities. Well, one of the additional services that this financial institution has is the issuance of current accounts.
Giro is actually a product created as a complement to other financial institution services such as savings and checks. Services from financial institutions such as savings, checks and current accounts have different functions. However, the general goal remains the same, namely to provide greater convenience for customers.
Basically, current accounts and checks have many similarities. This also applies to checking and savings accounts. Therefore, this article will discuss the various differences presented by these three services from financial institutions. The following is a review of the meaning of current accounts and their differences with checks and savings.
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A. Get to know Giro
Giro basically has the same function as other financial institution products, namely as a means of payment. Recently, current accounts are also often used by many people, such as savings and checks.
By definition, a giro can be interpreted as an order issued by a customer to the financial institution where they carry out savings activities. The issuance of a warrant is carried out so that the process of transferring a certain amount of funds from one account to another account is in accordance with what is stated on the giro bill.
In simple terms, current accounts can be understood as a medium that can be used to transfer funds between accounts or from one account to another. Even though the process for transferring funds to a current account is almost the same as transferring funds via an ATM, transferring funds to a current account has its own function.
Its function is almost the same as savings, making checking also have an account. A checking account can also be used to add and withdraw funds according to orders from the savings owner. However, checking accounts have an effective date, issue date, and maturity date.
In giro, issue date means the date when the giro is issued. At the time of issuance, current accounts cannot be used directly. However, the new giro can be used optimally when the effective date appears. Apart from these two terms, in current accounts there is also the term maturity date or what is usually called use-by date. This use date or maturity date is a rule that funds must be withdrawn before the maturity date or can be used and used, so that funds in the current account can still be transferred to another account.
To open a current account for individuals usually requires funds of around IDR 250 thousand. Meanwhile, companies wishing to open a current account require an initial deposit of IDR 500 thousand. When opening a current account, financial institutions usually charge an administration fee of around 1% to 2% of the lowest balance that has been determined.
B. Differences between Current Accounts and Savings and Checks
After understanding current accounts specifically and in depth, this section will discuss in detail several differences between current accounts, savings and checks. These three services from financial institutions have similarities, but also have differences so that they are better suited to the various needs of many people. The following are the differences between checking, savings and checks based on several parameters.
1. Issue and Effective Date
The special characteristic of giro is that it has an issue date and also an effective date. These two dates are intended to be used to indicate when customers can make transactions.
Meanwhile, savings services do not have dates like current accounts. This is what allows savings to carry out full-time transactions, whether transactions at financial institution offices or just via cellphone. Meanwhile, checks can be used effectively at any time if they have been made.
2. Due Date
Compared to savings and checks, current accounts have provisions on maturity or usage deadlines. This means, if the checking account has entered the maturity or grace period. So, transferring funds from a checking account to another account cannot be done. Therefore, when using a checking account, customers must be active in checking the date periodically.
3. Current Account
In issuing a checking account, both savings and checking accounts can do this. However, in some services or special conditions, neither savings nor current accounts may issue bank statements. Meanwhile, checks that have a value equivalent to cash cannot issue a checking account. The use of a check at a financial institution’s office is considered complete when it has been disbursed.
4. Search for Funds
For customers who wish to withdraw funds from their checking account, this can be done with a note before the due date. Meanwhile, when disbursing funds, savings can be more flexible because they can be done at any time, either through ATMs or through financial institution offices. Meanwhile, disbursement of funds for checks can be done directly at the office of the designated financial institution.
5. Withdrawal Amount
Based on the withdrawal amount parameters, demand deposits have the same properties as checks. Both demand deposits and checks can make unlimited withdrawals. This is because the amount of the withdrawal via check that will be cashed has already been written on the paper first. Meanwhile, in current accounts, fund transfers are carried out based on an order issued by the customer.
Meanwhile, for savings, withdrawals are usually subject to restrictions. When making transactions or withdrawals, several products from financial institutions limit the amount of withdrawals via ATM from IDR 5 million to IDR 15 million. However, on some products with priority types you can make larger cash withdrawals. However, if you want to withdraw a large amount of funds, customers can do it at the financial institution’s office to make it easier and safer.
Based on what has been stated above, a giro is an order issued by a customer to transfer funds from one account to another. The process of transferring funds to current accounts must comply with effective time provisions. This is why customers who have checking accounts have to regularly check the time so they can transfer funds.
In terms of withdrawing large amounts of funds, both demand deposits and checks are proven to be easier and easier to make payments and withdraw funds. Therefore, customers who use current account and check services should always be careful so that transactions do not result in large losses due to errors.
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C. Differences between Current Accounts and Savings Accounts
After trying to compare current accounts with savings and checks, we will discuss specifically the 5 differences between current accounts and savings.
1. Product Goals
Basically, financial institution products such as checking accounts and banks have the same financial account. The most visible difference in the objectives of financial institutions issuing these two products is the intended target. The presence of current accounts is basically aimed at several groups of people and companies that have high financial transaction activities in large amounts. Meanwhile, savings accounts are more targeted at people or companies whose financial transaction activities are normal and with amounts of money that are not too large.
When carrying out transactions via minimum statutory reserves, almost every financial institution such as a bank has very diverse policies. However, most of the transaction values carried out use various currency options. Therefore, current accounts greatly facilitate the transactions of companies that are already on a multinational scale.
Meanwhile, the minimum transaction that can be made from a savings account is usually IDR 10 thousand to IDR 15 thousand. Apart from that, savings accounts also have provisions such as a minimum balance that must be deposited by customers so that they can always be active and transactions can be carried out.
2. How to Withdraw Funds
Next, the most obvious difference between current accounts and savings is the method of withdrawing funds. In the increasingly easy digital era, withdrawing savings funds from a savings account at a bank via ATM is one of the methods most widely used by the public. Many people like ATMs because they have succeeded in providing fast, concise and of course safe money withdrawal services. Apart from ATMs, savings account holders can also withdraw funds at financial institution offices with the help of a teller. If you use the withdrawal service at the office, the only person entitled to withdraw funds is the account owner.
3. Withdrawal of Funds
Furthermore, withdrawals of funds from a checking account can only be done directly at the financial institution’s office. This is because the amount of funds usually withdrawn reaches a very large amount so it would be safer to meet in person. In addition, withdrawing funds using a bilyet giro has a time limit or maturity. Therefore, checking account customers are required to withdraw funds using a card for up to 70 days. If the funds have not been withdrawn, the billet will not be valid or cannot be transferred.
4. Transaction Nominal
The next difference between current accounts and savings is the transaction nominal. Savings accounts have a limit on the nominal number of transactions per day. This applies to transactions in the form of transferring funds or withdrawing funds. Financial institutions limit the nominal value of transactions even if they are large amounts.
The nominal limit on transactions that customers can make each day is IDR 10 million to IDR 20 million. If a savings account customer wants to make a transaction with a large enough nominal amount, the customer must make the transaction directly at the financial institution office with the help of a teller.
Meanwhile, with checking accounts, customers can make transactions with very large nominal amounts. Current account owners do not have any problems regarding the nominal transaction, because checking accounts are basically an order from the account owner himself. Apart from there being no limit on the nominal amount of transactions, financial institutions can also help with transferring funds and withdrawing funds. Current accounts usually carry out transactions every day with amounts reaching IDR 500 million.
5. Reports to Customers
Reports from financial institutions will be sent to checking account holders every month to the address listed in the account data. The account address can be placed at the customer’s office address or residential address. This monthly report is also known as a bank statement which contains an explanation of all transactions of the account owner per month, from money coming in and money going out.
Meanwhile, financial reports from savings account holders can be requested when customers want to carry out an audit. This is different from checking account statements which are routinely sent to customers’ addresses. If account holders want to know the transaction history of their savings account, customers can ask the financial institution to print it in their savings book. As a financial institution, the teller will be willing to print account transaction records in the savings book.
D. Opening a Current Account
After understanding the difference between current accounts and savings and checks, below we will explain how to open a checking account. Almost the same as other accounts, opening a checking account is quite easy. The conditions used to open an account can be almost the same as when opening a regular savings account, namely by completing all the registration forms provided by the financial institution.
However, each financial institution has its own requirements, but basically, the following are some general requirements used to open a checking account, including:
a. Photocopy of identity such as valid Resident Identity Card, driver’s license or PASSPORT.
b. Prospective customers are not included in the Bank Indonesia Black List (DHBI).
c. Have a Taxpayer Identification Number.
d. Fill out and sign the giro application form.
e. Prepare an initial deposit according to the nominal value that has been determined.
f. Prepare approved Articles of Association or Deed of Establishment, specifically for business entities.
g. Attach a Trading Business License, specifically for business entities.
h. Attach Company Registration Certificate, specifically for business entities.
i. Letter of approval from the Minister of Justice, specifically for business entities.
j. Domicile certificate, specifically for business entities.
D. Functions and Benefits of Current Accounts
The most important benefit of having current account services in the accounting sector is the ease of withdrawing finances at any time, this will greatly optimize financial transaction activities. Not only that, checking accounts can also be used to simplify transactions because you need to use large amounts of cash.
So, here are several functions and benefits that current account owners can experience:
a. Money in an account will be safer from crime.
b. Payment for buying and selling transactions becomes easier because it uses checks and bills.
c. Current accounts in the form of cash savings can be withdrawn at any time during working hours.
d. Current account holders only need to bring a check and bill of exchange when they want to make a transaction payment.
e. With a checking account there are no transaction limits.
f. Every month, customers who have a checking account will get a checking account so that the administration process will be easier and better.
Giro services will be very easy and comfortable in managing a company’s finances. Giro also provides very clear and very precise financial reports. The advantages will be very useful for business people who want to know the company’s financial status.