Difference between Current Bank Account & Savings Bank 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.
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
(1) Objective
The main objective of current account is to entertain maximum number of transactions while savings account encourages customers to make more savings.
(2) Eligibility
Savings Accounts are opened by the individuals mainly by salaried persons & HUFs whereas Current Accounts are opened by Non-individuals like Proprietors, Partners, Companies, Trusts, Associations, etc.
(3) Interest Rate
Savings Accounts offer periodic interest on deposits which ranges between 3.5% to 7% while Currents Accounts generally don’t offer any interest. However, some banks have started offering low interest now-a-days.
(4) Over Draft (OD) or Cash Credit (CC) Facility
Current Accounts offer Bank Overdraft facility to the customers whereas Savings Account don’t offer such a facility to the customers.
(5) Minimum Account Balance (MAB)
A higher Minimum Account Balance needs to be maintained in Current Account as compared to that of Savings Account. The limit of the same is decided by the banks and differs from bank to bank.
(6) Number of Transactions
As the Current Accounts are opened with an objective of carrying out very frequent transactions, they don’t usually put any cap on number of transactions. Savings accounts usually put a limit on the maximum number of transactions which ranges between 3 to 5 transactions per month. After crossing these limits, the customers need to pay charges on additional transactions done by him.
(7) Nomination Facility
Nomination Facility is available in Savings Account but it is not available under Current Account.
(8) Opened for
Current Accounts are normally opened for making business transactions and paying bills while Savings accounts usually are used for salary accounts and making small savings.
At an ATM, we are always faced with the option of choosing between a Saving Account or a Current Account. These are two kinds of accounts which have been set up to serve different purposes and address the financial needs of different kind of users. Current accounts and savings accounts are offered by almost all leading banks in India like, Axis Bank, SBI, Kotak Mahindra Bank, HDFC Bank, Citibank, YES Bank, IndusInd, and many more. However, both these accounts are different from each other in various aspects. Read on to find out more about what each of these accounts have to offer.
Savings Accounts
A savings account is designed with the primary purpose to help 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 on Savings Accounts range anywhere between 4% to 6%. These accounts do usually carry the facility of issuing cheques.
Check Banks with Highest Interest Rates in India
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.
Savings Account v/s Current Account
A Savings account differs from a Current account in many ways and aspects. Both these accounts address different financial needs of the user, helping in better money management. Here are some of the major points based on which one can distinguish between a Savings and a Current Account.
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 4% to 6% 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.