The two most prevalent types of accounts kept by organisations and individuals are savings accounts and current accounts. While both savings accounts and current accounts assist individuals and businesses manage their assets in some manner, they are considerably different in terms of the objectives for which they are used, the services they offer, the fees charged, the interest received, and so on. Understanding the distinction between the two types of accounts is critical for everyone who want to keep their earnings in a bank account.
The article below provides a detailed overview of each type of bank account and discusses how they differ from one another.
Savings accounts, as the name implies, are used to save money. Savings accounts typically pay a higher percentage of interest on funds stored in the account. The interest rate varies depending on the bank, the amount kept in the account, and the type of account. Savings accounts have a monthly withdrawal restriction, and any amounts withdrawn are subject to a modest fee. The number of deposits that can be made, on the other hand, is not limited.
Savings accounts only allow the account user to withdraw funds up to the amount in the account, and there are no overdraft options available. Depending on the bank, the amount of interest provided, and the kind of account, savings accounts may have a minimum balance requirement.
Checks are deposited into current accounts, and bills are paid with them. Current accounts, in general, do not pay interest on funds retained; however, there may be some exceptions depending on the bank or type of account. Current accounts often do not have withdrawal limitations, which means that account users will not be charged an additional fee if they make excessive withdrawals. A current account makes it easier to access funds, and an account holder can access more financing (than the amount of money in their account) if they have negotiated an overdraft facility with the bank.
Current accounts typically contain a number of expenses that must be paid, such as ATM fees, overdraft fees, online bill payment fees, and so on. Most current accounts also require a minimum balance to be maintained in order for the account to have enough funds to fulfil the regular bill payments.
Key differences between current account and savings account
The table below is intended to provide a quick and useful summary of some of the key distinctions between a Current and Savings Account. While further nuances or distinctions may exist based on the bank and its offers, the table below highlights the most prevalent distinctive elements and principles.
|Basis of differentiation||Savings Account||Current Account|
|Interest||On the money deposited, interest is paid.||There is no interest given.|
|Use||To create emergency funds.||For consistent commercial transactions.|
|Transactions||Transactions are limited to a certain amount of times per day/month.||It is intended for daily transactions.|
|Balance||A small minimum balance is necessary.||A large minimum balance is required.|
|Best choice for||Individuals, salaried professionals, senior citizens, and so on.||For business owners, firms, corporations, trusts, or organisations.|
|Over draft facility||It is not given.||It is given.|