You can choose from different types of bank accounts, with the most common being a savings account and a current account. Since these are the most used accounts, knowing the difference between a current account and a savings account is essential.
Current and savings accounts are completely different and work wonders if you know what you want to do with your money. Before we discuss the differences between a Current account and a Savings account, it is prudent to discuss the meaning and features of each type of account.
It’s an account meant to serve as a safe reservoir for your savings. You can make deposits and withdrawals from a savings account. The amount stored in a savings account also attracts interest.
A savings account is ideal for all customers, including students, homemakers, salaried employees, freelancers, etc. A savings account is almost a risk-free way to save money and earn interest. With online banking, you always have instant access to your account.
And just saving your money is not the only feature of a savings account. You also get access to a debit cum ATM card, a chequebook, an overdraft facility (limits vary from one account to another), fixed deposit, and recurring deposit, to name a few. Some banks normally require you to maintain a minimum balance in your savings account either monthly, quarterly or yearly, depending on your chosen bank.
A current account is a type of bank account designed to offer the service of a high volume of transactions to the account holder. This type of bank account is ideal for business purposes with frequent transactions into the account. Therefore, companies, sole proprietors, and partnership firms prefer current accounts for the smooth operation of their businesses.
Compared to a savings account, the minimum balance requirements for a current account are usually quite high. Such an account does not attract any interest for the account holder. One of the notable features of a current account is that there is no limit on the number of transactions that can be carried out. This feature enables the seamless operations of businesses where there are usually multiple daily payments and receipts.
Current accounts also offer a wide array of critical banking services, such as the facility of demand drafts, cheques, and overdrafts.
Now that you're aware of current and savings bank accounts' meanings and salient features let's discuss how the two differ. The following table clearly shows how to distinguish between a savings account and a current account.
While a savings account is suitable for individuals seeking a risk-free way to save and earn interest, a current account caters to the specific needs of businesses with its transaction-oriented features. Assessing your financial goals and requirements will guide you in selecting the most appropriate account that aligns with your needs, whether to safeguard your savings or facilitate efficient business transactions.
Fi Money offers a zero-balance online Savings Account in partnership with Federal Bank. You can easily sign up for free & open a Savings Account online in 3 minutes. You can also use this Savings Account to safely stash your savings in deposits, earn additional interest, send/receive money instantly, analyse expenses, or budget smarter. If you upgrade to other account plans within Fi — you get access to premium features like Jump, zero Forex, US Stocks, Mutual Funds, etc. & up to 4x rewards for all payments!
A Current account is a type of bank account that is meant for frequent transactions. If you run a shop or a company and need a bank account that can accommodate several daily transactions, then a current account is an ideal choice. With unlimited transactions, such an account can help you in the smooth operation of your business.
Both Current Accounts and Savings Bank Accounts have their own unique sets of benefits. While a savings account is ideal for saving and managing money for an individual or a household, a current account is ideal for a business entity or sole proprietor. The type of account you choose depends upon your requirements for a bank account.
No, considering the basic features between current and savings accounts differ, you can't use a current account as a savings account.
Savings accounts are generally considered safer than current accounts, as they are intended for individuals and offer deposit insurance. In contrast, current accounts are for businesses, have no deposit insurance, and lack interest. Savings accounts also have more regulatory oversight, but their safety depends on the stability and regulations of the bank.
The minimum balance for savings and current accounts depends on the bank you choose for the same. For current accounts, it can be as low as ₹1000. However, some banks do offer zero-balance current accounts too. On the Fi Money app though, you can open a zero-balance Federal Bank savings account in about 3 minutes.