Current Account and Savings Account: 5 Major Differences

The banking needs of a business owner are relatively different from those of a working professional. When opening a new bank account, it is essential first to understand the different types of accounts to ensure that you select the one that perfectly meets your requirements.

A Savings Account and Current Account are two common types of bank accounts offered by most banks in India. But how are these two accounts different? Here is a list of 5 of the most significant differences between the two-

1. Objective of Account

As the name suggests, a Savings Account is a deposit account, which aims to encourage savings among individuals. You can open a Savings Account and deposit your savings in it for your expenses and financial emergencies.

A Current Account, on the other hand, is a running or a checking account with no limits on their use throughout a working day. It is aimed to facilitate regular transactions as required by the business owners.

2. Interest Rate

One of the most significant incentives of opening a Savings Account is the interest that you earn on the maintained balance. The interest is calculated daily and generally deposited in the account on a monthly or quarterly basis.

While Current Account comes with benefits such as no limits on deposits and withdrawals, such accounts do not earn any interest.

3. Minimum Balance Requirements

With both the types of accounts, the account holder is required to maintain the minimum balance always. The banks can charge a penalty if you default on maintaining the minimum. For a Savings Account, the minimum balance requirements are generally low. Some of the banks now also offer a zero-balance savings account. The minimum balance required in a Current Account is considerably higher than a savings account.

4. Overdraft Facility

Overdraft facility is a type of pre-approved loan. With this facility, an account holder gets to withdraw an amount higher than the amount available in their bank account up to a limit fixed by the bank. Savings Account holders do not get this facility.

5. Who Should Open?

Based on the differences listed above, it is not difficult to understand that a Savings Account is ideal for individuals who have limited banking needs and want to save their earnings while also earning interest on the same.

However, if you are a business owner, professional like a doctor who practices independently, or want to open a bank account in the name of your business, a Current Account is what you need. The features and benefits of this type of account are adequate to meet your complex banking needs.

Opening a New Savings or Current Account

Once you know the type of account that you'd like to open, the next step is to select the right bank. If you want to open a Current Account, prefer a bank that offers customised account solutions to meet your banking needs perfectly.

Unlimited transactions and 24x7 deposits are some other features that are must for a Current Account.

Savings account are the most conventional methods of saving money, and they have been around for a long time.