Savings Account vs Current Account
Savings account and current accounts are designed for different purposes and have different features. Savings accounts cater to individuals who want to save whereas current accounts are made for regular transactions of firms and companies.
Current and savings accounts are made for different things, and they offer different benefits. Current accounts are designed for routine transactions of businesses and companies, whereas savings accounts are for people who desire to save. Interest rates in Savings Accounts are higher than those in current accounts.
- Savings accounts accrue higher interests than current accounts.
- They cater to individuals while current accounts are more suitable for companies and firms.
- Such accounts have a monthly transaction limit whereas current accounts don't.
- Minimum balance requirement is lower in savings accounts than current accounts.
Savings Accounts
- A savings account is designed with the primary purpose of helping you save.
- This type of account allows the holder to deposit money as is convenient, on which the holder can earn interest.
- A Savings account may be opened by an individual or jointly and requires the holder to usually maintain a pre-specified amount as minimum balance.
- Interest rates earned in Savings Accounts range anywhere between 2.60% to 8.00% p.a. These accounts do usually carry the facility of issuing cheques.
Check out related articles: Savings Account Interest Rates
Current Accounts
- Current Accounts derive their name from the purpose they are suited for, regular transactions.
- This type of account is more suited for users like firms, companies, public enterprises, businessmen, etc.
- Currents accounts do not earn any interest due to the fluidity they offer.
- Current accounts usually do not carry a limit on the number of transactions which can be made.
Difference Between Savings Account and Current Account
A Savings account differs from a Current account in many ways and aspects. Both these accounts address the different financial needs of the user, helping with better money management. Here are some of the major points based on which one can distinguish between a Savings and a Current Account:
| Savings Account | Current Account |
Purpose | The purpose of a savings account is to encourage and promote saving. | It is made to make frequent or routine transactions easier. |
Ideal for | Perfect option for anyone with a regular or steady income, such as paid employees. This kind of account is also perfect for people who need to accomplish any short-term financial objectives, such as funding an upcoming vacation, paying for a wedding, purchasing a car, etc. | It is more suitable for businesspeople, firms, companies, organisations, public entities, etc. who frequently need to transfer money. |
Monthly Transactions | The maximum number of transactions that an account user can do in a month is often capped by banks that offer the option of a savings account. Typically, 3 to 5 transactions—both financial and non-financial—per month are allowed without incurring any fees. | Have no upper restriction on the total number of transactions that one can complete. This is primarily due to the fact that current accounts are used to conduct frequent transactions. |
Interest | Will typically yield your interest at a rate of 4% to 6% on a predetermined basis. Since these accounts do not permit a limitless number of transactions, it is simpler to amass more money over time. | Banks often don't offer interest on current accounts. This is because the account is flexible and permits frequent transactions. |
Minimum balance | For Savings accounts, the minimum balance required is usually low. | For Current accounts, one may need to maintain a relatively higher amount as minimum balance. |
Purpose:
Savings Account: A Savings Account has been designed to encourage and promote savings
Current Account: Is designed to facilitate regular or frequent transactions.
Ideal For:
Savings account: ideal choice for any individual who earns a steady or regular income like salaried employees. This type of account is also ideal for those who have any short term financial goals to meet like a future vacation, financing a wedding, buying a car etc.
Current Account: Is more suited individuals who are required to carry out frequent money transfers like businessmen, firms, companies, organizations, public enterprises, etc.
Monthly Transactions:
Savings Account: Banks offering the facility of a Savings account do usually put a limit on the maximum number of transactions which a holder can carry out in a month. The permissible limit without attracting any charge is usually anywhere between 3 to 5 transactions per month (financial and non-financial).
Current accounts: Do not have any limit on the maximum number of transactions which one can carry out. This is primarily because Current accounts serve the purpose of carrying out frequent transactions.
Interest:
Savings Account: Will usually earn you an interest between 2.60% to 8.00% p.a. on a pre-specified basis. Since these accounts do not allow unlimited transactions, it is easier to accumulate more funds over a period of time.
Current Account: In the case of current accounts, banks usually do not provide any interest. This is due to the fluid nature of the account which allows frequent transactions.
Minimum Balance:
Minimum balance is the minimum amount of money which must always be in your account in order to prevent it from de-activating or lapsing.
For Savings accounts, the minimum balance required is usually low. However, for Current accounts, one may need to maintain a relatively higher amount as minimum balance.
Other Useful Reads :
- Steps to Develop a Healthy Saving Habit
- Which Type of Account Is Usually the Most Liquid?
- Banking Mistakes You Cannot Afford to Make
- What is Inactive or Dormant Bank Account?
- NRE Savings Account v/s NRO Savings Account
- Should I Go for One Bank or Many When it Comes to Keeping my Accounts
- Top 7 Smart Money Saving Tips
- Top 8 Money Management Tips Even During Job Loss
FAQs on Savings Bank Accounts v/s Current Accounts
- What is the purpose of savings account V/s current account?
The main difference between the purpose of savings and current account is that savings account is meant for those individuals who want to save their earnings. While current account is for firms or companies that have regular transactions.
- What is the difference between a Savings account and a current account?
A savings account lets individuals save money and earn interest with limited transactions. Current account is for businesses or firms with unlimited transactions and no interest.
- What is the difference between current account and savings account maintenance?
Savings accounts may have maintenance fees, though some banks offer zero-balance options. Current account charges vary by bank, with some charging around Rs.1,500 and others none.
- What is the interest rate on savings and current accounts?
Interest earned in the savings account mostly ranges between 4.00% to 6.00%. While for the current accounts, most banks do not provide any interest on the balance of the account due to the fluidity of the account offered by the bank.
- What is the required minimum balance for a savings and current account?
The minimum balance required for the current account is much higher than for the savings account and it depends upon the bank policies, which vary from one bank to another.
- What are the similarities between Current and Savings Accounts?
One of the similarities between current account and savings account is the facilities that both these accounts provide ATM or debit cards, internet banking service along with the facility to open joint account or single account.
- What are the advantages of saving account?
A savings account is advantageous as it provides easy access to the fund and enables users to earn interest from the available balance. Savings account offers liquid asset and ensures a minimum deposit amount for balance maintenance. A savings account is also beneficial as it offers no lock-in period and provides automated bill payment facilities.
- What are the advantages of the current account?
A current account's key benefits are the freedom from withdrawal limits on cash, the ability to make numerous transactions each day, access to the internet, the ability to make direct payments using checks, and the availability of overdraft facilities.
- What are the disadvantages of current accounts?
The disadvantages of current accounts include the absence of interest on the available amount, restrictions on the number of free checks and demand draughts, occasionally expensive service fees, the lack of automated bill payment services, the requirement to maintain a high minimum level, and the imposition of predefined penalties on frequent transactions.
Disclaimer
Credit Card:
Credit Score:
Personal Loan:
Home Loan:
Fixed Deposit:
Copyright © 2025 BankBazaar.com.