There are different types of bank accounts that you can choose from, with the most common being a savings account and a current account. Since these are the most used accounts, it’s essential to know the difference between a current account and a savings account.
I remember visiting the nearest branch of a leading national bank to open my first bank account, the officials there had informed me about the different types of accounts I could choose from. Since I had just started working then, my main requirement at the time was saving money that I got a salary from and making the occasional cash withdrawal. I ended up opting for a savings account.
But during the account opening process, I did come across the term current account and was not sure at the time why the option was given. However, once the features of both types of accounts are clearly understood by me, there was no room for misinterpretation.
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 types of customers, including students, homemakers, salaried employees, working professionals, freelancers, pensioners, etc. Having a savings account is almost a risk-free way to save your money and earn interest on it. With the facility of online banking, you have instant access to your account at all times.
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 the bank you choose.
A current account is a type of bank account that has been 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 in a particular current account. This feature enables the seamless operations of businesses where there are usually multiple payments and receipts every day.
Like a savings account, a current account offers a wide array of critical banking services, such as the facility of demand drafts, cheques, and overdrafts. True to its name, a current account functions as the current or lifeblood of a business, particularly one that requires frequent deposits, withdrawals, and payments. minimum
Now that you’re aware of current and savings bank accounts' meaning and their salient features, let’s discuss how the two are different from each other. The following table paints a clear picture of how to distinguish between a savings account and a current account.
A Savings Account and a Current Account have distinct features and benefits.
The selection of one over the other completely depends on the requirements you may have from a bank account. You can have a savings bank account for savings and a current account for your business transactions.
Banking plays a much bigger role in our lives than we realise. It is, therefore, important to understand the finer nuances of major banking products and services and make an informed and suitable choice. Whether you are looking to open a savings account or current account or apply for a debit card, you must study the features of the various variants and opt for the one most in line with your requirements.
Here are some Frequently Asked Questions About Savings Bank Accounts and Current Accounts.
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 transactions in a day, then a current account is an ideal choice for you. With the facility of 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. Whilst a savings account is ideal to save and money management for an individual or a household, a current account is ideal for a business entity or a sole proprietor. The type of account that you choose depends upon your requirements from a bank account.