Comparision of Savings Account And Current Account

Last updated on October 16th, 2023 at 03:48 pm

Banking sector provides two basic accounts for the customers as an operative account they are Savings Account and Current Account.

You might be new to banking and want to open a new account and does not know which one will suit you Savings or Current account. Or you are already having a bank account but does not know the difference between the two types.

Here in this article we would compare the two types of accounts and provide you with pros and cons of both so that you could understand them.

Table of Contents

What is Savings Account?

Savings account is the basic operative account provided by banks to everyone as a savings option. This account can be opened by anyone and can be operated without a need for regular updation of KYC and transaction details.

Savings account as the name suggests does provides option to save your money with the bank. Thus you can deposit or withdraw cash from savings account any time you want.

Savings Account also provides basic banking facility like Debit Card, Internet Banking, Mobile Banking and SMS banking at an affordable cost.

The amount deposited in Savings account also earns interest. Though it is comparatively lower than the Term Deposit interest rate you can seamlessly transfer funds without any physical intimation to the bank.

What is a Current Account?

Current Account is a special operative account provided for the business transaction. Thus current account can be opened for an individual or in the name of a business entity like Company, Trust, HUF, etc.

Since these accounts are provided for the business transaction the minimum balance requirement for the account is more than the savings account.

The account can be opened for the Individual as well as Non Individual upon satisfying the KYC norms as per RBI direction.

But current account comes with lot of benefits like low charges and commissions payable to the bank. The number of transactions in the current account is not limited.

Current account generally does not earn interest, thus the amount lying in the current account does not provide any income to the customers.

Savings Account Vs Current Account

Both Savings and Current account provide basic banking facility to its customers. But if you are in a dilemma to choose between them consider the following before opening account.

Who Should Open Savings Account?

Savings Account can be opened for securing your hard earned money with the protection of bank.
As Savings Account pays interest to the amount deposited in the account. It is a safe investment and is almost equal to liquid cash.
Savings account can be opened if you are in need of a basic banking services like Debit Card, Credit Card, UPI, etc. in your day to day life.
If you want to get a loan from a financial institution, the process would be easier if you have a Savings Account with the same institution.

Who Should Open Current Account?

As said earlier the Current Account is opened for business transaction, thus it is suitable for business persons.
Thus if you are a business man/ woman and wants to keep track of your transaction break off from your personal transaction you can opt for a Current Account.
Banks does not provide interest on Current Account, thus it can not be used for keeping your money idle of for safekeeping.
If you want to open a account for an entity other than the individual you can choose the Current Account.