Inserting your bank card into an Australian ATM or card reader presents the option of selecting to make payment or withdraw cash using one of three accounts: Credit, Savings or Cheque.

But the latter two options have sparked confusion and debate during a discussion.

Posting to the ‘Ask an Australian’ SubReddit, a puzzled UK expat who now lives in NSW asked the online community why he’s required to choose between a ‘Cheque Account’ or ‘Savings Account’ to access his money – particularly since neither name accurately describes his account.

‘I just don’t know which of these two options my everyday bank account is because the real answer seems to be “neither”,‘ he wrote in the post, adding that he was simply using the bank account ‘for everyday transactions’.

‘I usually have to choose “savings account”, which is extra weird because I definitely don’t have savings,’ he added.

Turns out, the British expat wasn’t the only one scratching his head. One person replied: ‘As an Australian, I too would like to understand these options the ATM gives me.’

The question quickly ignited discussion and a varied range of explanations – including how the names originated.

An Australian woman offered the most succinct answer, responding: ‘Cheque accounts were once for people who had literal paper cheque books.’

A UK expat took to Reddit to try and understand why he is presented with the options of choosing between a ‘cheque account’ or ‘savings account’ when trying to make payments on card readers or withdraw cash at an ATM

Others agreed, explaining that in the times before BPay, AusPost, BillPay and other digital payment transfer options, a physical cheque would be written to make a purchase or pay a household bill.

‘With the rise of credit cards, then EFTPOS and then electronic payments… personal cheques and the cheque account became pretty much redundant in Australia,’ another explained.

Even though banks rarely issue cheque books nowadays, one woman added that the term stuck around as the name for a transaction account that you could make payments from.

On the contrary, the same woman explained that the “savings account” option at ATMs or on a card reader is similarly an older term for ‘an everyday transaction account’.

This account would typically be linked to an EFTPOS bank card and could be used at ATMs to make payments or withdraw cash.

The woman noted that a ‘savings account’ and a ‘cheque account’ could also be linked to the one bank card – which is why you are presented with the option to choose between them when withdrawing cash or making a payment.

Another person referred to Australian bank history to further clarify the distinction between the two accounts.

One older Aussie explained that in pre-GST times, ‘any account that had a cheque facility’ attracted ‘BAD tax – bank account debit tax’. Because of this fee, ‘you only used the cheque account if you wanted to write a cheque’.

A number of Aussies chimed in to offer an explanation, with the main explanation being that a ‘cheque account’ was outdated terminology for accounts that previously had physical cheques linked to them

‘This is the actual functionality that created the difference,’ another added. ‘These taxes were abolished when the GST was introduced. At that point cheque and savings accounts became effectively interchangeable [as transaction accounts].’

Some people noted that the terminology has become so redundant that you may even notice newer terminal payment card readers offering: ‘Savings/Cheque Account’ as a single option.

However, responders were understanding of the original poster’s confusion over the ATM or card reader asking them to access their “savings account”.

Although the account name continues to exist as an option on electronic card readers and at ATMs, banks themselves use quite different terms when opening bank accounts for customers.

Typically, they would refer to a ‘transaction account’ as an account that’s linked to a card and designed to be used regularly for payments or cash withdrawals. Whereas a bank offering customers a ‘savings account’ more often is referring to the type of account that yields a high interest return, and isn’t designed to be a go-to account for withdrawals or card payments.

So why are these bank account selection options peculiar to Australia, and not other parts of the world?

One commenter explained that when EFTPOS terminals were introduced in Australia, these were the most common account types at the time – and so the names have persisted.

‘We got left with this historic artifact of the names ‘cheque’ and ‘savings’ accounts,’ one reply offered.