Difference Between Current Account and Savings Account

Current Account Vs Savings Account – Overview

A bank account is also known as the financial account that is maintained by the financial institution that records the number of transactions that take place. In history, it is said that the bank account first came into existence in Mesopotamia around 1800 BC. In the olden days, people followed the barter system whereby they exchanged goods in return for goods. Suddenly, money came to life and people started exchanging goods for money. In modern times, people needed a place to safeguard their money and that gave birth to bank accounts. 

What is a Bank Account? 

A bank account is an account where you can store all your savings in the form of money and easily withdraw them when you need them. Banks also provide you an extra sum of money for allowing them to store your savings. That extra sum of money is known as the savings interest. Depending on the rate of interest the bank will give you the interest amount on your savings. The bank account is divided into two distinct categories:

What is Savings Account?

Opening a savings account with the bank allows you to store your extra money in the bank account and earn interest on the savings amount. Any of the citizens can open a savings account with the bank which is considered to be the safer option for most individuals. 

What is Current Account?

When you open a current account, you gain the ability to conduct any type of transaction without telling the bank. People who run businesses and need to conduct regular transactions typically open these types of accounts.

Difference Between Savings Account and Current Account – Features

Savings Account Current Account
Fixed Interest Quick Transactions
Minimum Saving Balance Overdraft Facility
Suitable for Individuals Suitable for Businesses
Transaction Limit Multiple Transactions

Savings Account Features

  1. Fixed Interest

Savings accounts are popular because they give you a fixed amount of interest based on the market rate. If a bank offers a quarterly savings rate of 4%, you will receive your interest every quarter at that rate. The banks determine interest rates, which change every quarter.

  1. Minimum Saving Balance

Every bank account requires you to keep a minimum balance in order for the account value to stay above zero. But, you must have a lower minimum savings balance of Rs. 1,000 to Rs. 20,000 to open a savings account, which may not be the case with a current account.

  1. Suitable for Individuals

A savings account may be the ideal solution for you if you wish to save money for an emergency fund or for any other reason. Individuals can easily save a lesser amount of money each month in their bank accounts and receive additional interest.

  1. Transaction Limit

If you have a savings account, you may be limited in the amount of transactions you can make in a given period. Each bank may have its own rules, but the typical rule is that if you have a savings account, you can only draw 30 checks per year.

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Current Account Features

  1. Quick Transactions

The current account’s best feature is that it will execute your transactions considerably more quickly. Having a current account allows you to conduct any type of transaction without having to notify the bank.

  1. Overdraft Facility

The overdraft facility is one of the reasons why businesses prefer the current account. An overdraft facility ensures that a transaction is completed even when funds are insufficient. For using the overdraft facility, the bank will charge you a little interest rate and change the amount after the money is deposited.

  1. Suitable for Businesses

People are unable to open a current account because the services are only available to individuals who want to conduct regular cash transactions. Companies open a current account not only to expedite multiple transactions, but also to take advantage of the overdraft facility.

  1. Multiple Transactions

If you have a current account, you can easily conduct many transactions without the account being restricted. Current account customers have a variety of benefits while making payments, making it easier for them to complete their transactions.

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Final Thoughts – Key Takeaway Points

It is preferable to open a savings account if you are an individual wishing to store money for future use or emergency cash. Yet, if you are a young entrepreneur looking to conduct regular business activities, you should create a current account to take advantage of additional benefits.

Frequently Asked Questions

What is a savings account?

It is a personal account that is usually set up with the goal of saving and spending money for regular costs.

What is a current account?

It’s a business account with the intention of being used for business transactions.

How to open a savings account or a current account?

They will almost always request a basic set of documents for KYC purposes. The bank may request additional business documentation for current accounts.

What is the minimum balance requirement for savings accounts?

It varies on the bank and the type of savings account. Accounts with no minimum balance are also available.

How to close a savings account or current account?

You must make a request through your bank. For more information, contact your bank.

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