Banks provide several options to their customers to save their money and receive interest on the same. Moreover, they also help in regulating money in an economy. The two accounts that are majorly used by people are current accounts and savings accounts. These accounts are quite similar, but there are some major differences.
Wondering what these are? We are here to tell you just that. Below we have covered what actually is a current and savings account, along with the difference between the two. So, read on to find out which account you should go for.
Banks provide a current account to both individuals as well as institutions to deposit their money as it is a type of deposit account service. A current account is offered to those individuals or institutions who make a higher amount of financial transactions than the usual person. So, a current account is a special type of account that helps in regulating several financial transactions. Below are some of the features of the same:
- Yes, current accounts can be used by individuals for their everyday use as well. However, they are preferred by businesses, trusts, associations, etc., because of the number of transactions they make every day.
- Mostly, current accounts do not offer any interest on the deposits, but some accounts have started doing that now,
- You can enjoy an overdraft facility by opting for a current account.
- These accounts are of continuing nature, so they do not have any fixed tenure for which they need to be operated.
- There is no cap on both the amount being deposited or withdrawn. However, the holder needs to have sufficient funds for the withdrawal or transfers they are making with the account.
- Holders must maintain a higher minimum balance. If they fail to do so, they are charged with penalties.
Apart from all these features, there are further distinct types of a current account. These distinctions are made to make it easier for businesses and other entities to choose an account that best suits them. These are:
- Premium current account
- Packaged current account
- Foreign current account
- Standard current account
A savings account is also a type of deposit account and also allows you to withdraw the money when required. Moreover, a savings account also provides interest to the holders of the account. Other features of a savings account are:
- There is no restriction on the amount deposited as well as the account is withdrawn. However, banks require the holders of a savings account to keep a minimum balance in the account. If that is not maintained, a penalty fee is charged.
- There is no time limit imposed on the account, so you can keep the account for as long as you want.
- You do not get an overdraft facility with a savings account.
- Holders of a savings account are given debit cards and online banking facilities along with ATM cards.
- Savings accounts also restrict the number of transactions on a daily or monthly basis, depending on the bank.
Much like current accounts, there are distinct types of savings accounts as well. These are:
- Regular savings account
- Zero balance savings account
- Children and minor savings account
- Salary savings account
- Women’s savings account
- Family savings account
- Senior citizen savings account
Now you know the features and differences of both a current account and a savings account. Below is an overview of the differences mentioned above:
- Interest: Interest is only provided by a savings account and not a current account.
- Transactions: A savings account imposes a daily/monthly restriction on the number of transactions, whereas a current account does not.
- Use: A savings account is used for regular savings, while a current account is used for business transactions.
- Balance: A savings account requires a low minimum balance, while a current account requires a high minimum balance.
- Overdraft facility: Only a current account holder enjoys an overdraft facility; a saving account holder does not.
That was all! Now you know the major differences between a current account and a savings account. These differences will help you make an informed decision about what type of account you want to go for. Make sure you keep these differences in mind, and you will be good to go!