Where should I invest my money: in a savings account or a current account? If you are puzzled by this, let us help you in gaining a thorough understanding of both types of accounts and the differences between them.
Difference Between Savings Account and Current Account
| Service | Savings Account | Current Account |
|---|---|---|
| Interest | Interest is provided on the deposited amount | No interest is provided |
| Transactions | Restricted number of daily/monthly transactions | Meant for daily transactions |
| Use | For building emergency funds | For regular business transactions |
| Balance | Low minimum balance required | High minimum balance required |
| Best for | For individuals, salaried professionals, senior citizens, etc. | For businessmen, firms, companies, trusts or associations |
| Overdraft facility | Not provided | Provided |
What is a Current Account?
A current account is a type of deposit account service given by the banks to individuals or institutions who intend to make a higher number of financial transactions on a day to day basis. This kind of account allows smooth, everyday transactions with a drawback of no interest acquiring ability. The following features further explain a current account-
- While individuals can use current accounts for day-to-day transactions, they are typically used for regular transactions by businesses, trusts, associations, and private/public entities
- This type of account does not pay interest on deposits; however, some banks have recently begun to pay interest on such accounts
- An overdraft facility is available with a current account
- These accounts have a higher minimum balance requirement. If it is not maintained, a penalty is imposed by deducting money from the user’s bank account
- Current accounts are of a continuing nature, which means, such accounts do not have any fixed tenure to be operated
- KYC documents are required to open current accounts
- There is no limit to the amount that can be deposited or withdrawn; however, the account holder must have sufficient funds in his/her account to complete the transactions
Current accounts are further subdivided into various variants, allowing businesses, entities, trusts, and others to select the most appropriate one for their needs. These are as follows:
- Premium current account
- Standard current account
- Packaged current account
- Foreign current account
Because banks offer different types of current accounts, you should first decide which bank you want to open your account with. After that, thoroughly examine all of the current account options in terms of their benefits, features, and service before deciding on one!
What is a Savings Account?
A savings account is a type of account that allows you to deposit money, and withdraw the same whenever required, all while earning interest on the deposited amount. The savings account features can be further explained as-
- Savings accounts have no restrictions on the amount deposited or withdrawn; however, it is mandatory to maintain the minimum balance in the account; otherwise, a penalty will be charged by deducting a specific amount from the account itself. Paytm Payments Bank is an exception to the rule that most banks require users to keep a minimum balance in order to manage their accounts
- A savings account can be operated for as long as one wishes, which means that there is no time limit for managing the account
- Banks pay the account holder a fixed interest rate on the amount deposited
- An overdraft facility is not available with a savings account
- Savings account holders receive debit cards and online banking services for regular transactions-whether online, offline or at ATMs
- The number of transactions allowed in savings account on a daily/monthly basis is limited
- A Savings account can be opened by any Indian resident; however, in the case of children and minors, parents/guardians must open and maintain the account
- A savings account promotes saving habits
You have the option of selecting one of many savings account variants that best meet your needs because savings accounts are one of the best ways to save money without having to carry cash around. The following is a list of savings accounts offered by a variety of banks, which may differ from one to the next:
- Regular savings account
- Salary savings account
- Zero balance savings account
- Children and minor savings account
- Family savings account
- Women’s savings account
- Senior citizen savings account
The features, benefits, and eligibility of each savings account variant vary. For example, a Senior Citizen Savings Account differs from a Children and Minor Savings Account in that the former is intended only for senior citizens and the latter is intended for children under the age of 18. Similarly, a salary savings account is only available to salaried professionals, whereas regular savings accounts are available to anyone. As a result, before selecting one, determine which bank and savings account variant will best meet your needs.
