07 AUGUST, 2023

The goal of opening a bank account may differ from one person to another – some might seek safe monetary storage, while others might use the bank account to fuel business growth through smooth transactions and unique banking services. To meet both interests, various banks offer two types of bank accounts – Savings and Current Accounts. Discussed here are the key differences between a Current Account and Savings Account to assist you in making an informed decision based on your financial aspirations. Knowing the difference between the two will also allow you to understand the type of bank account you currently hold.  


A savings bank account is designed to promote and encourage the habit of savings, while an offline or online current account facilitates frequent or regular transactions of a higher amount than Savings Account for businesses through cheques or online bank transfers. 

Ideal For

A Savings Bank Account is best if you earn a regular or steady income. This kind of account is ideal for you if you hold a short-term financial goal like future vacation plans, funding a car purchase or wedding, etc. In contrast, a Current Account is suitable if you're required to make regular high-amount transfers for your business. 

Minimum Balance Requirement

The minimum balance amount is the amount of money your account must always maintain to prevent the account from any lapse or deactivation. In the case of a Savings Bank Account, the minimum average balance requirement is generally low. However, for a Current Bank Account, you may require maintaining a considerably higher minimum average balance. Owing to the advantages of a Current Account like an overdraft facility, effortless banking, unlimited fund transfers, etc., the account requires you to maintain a higher minimum average balance. 

Monthly Transactions

Banks offering Savings Account facilities generally limit the maximum number of transactions you can conduct monthly. The permitted limit without incurring fees is typically between three and five monthly transactions. However, in the case of a Current Account, there’s no limit on the number of transactions allowed. 

Additional Read: Differences between Merchant One and Merchant One Premium Current Accounts

Rate Of Interest

A Savings Account generally earns an interest of up to 4 per cent per annum. As such accounts do not permit unlimited transactions, it becomes simpler for you to accumulate higher funds over a period of time. However, before you hit on the Current Account opening option, note that financial institutions do not offer any interest earning for this account. No Current Account interest rates are offered because of the account’s fluid nature, which permits swift transactions of a higher amount. 

Ending Note

From the above features of a Current Account and Savings Account, it must be clear to you how both accounts differ from one another. A Savings Bank Account is used to withdraw and deposit funds and earn interest on the balance maintained with the account. This financial instrument encourages you to save and manage your daily expenditures. In contrast, a Current Bank Account is ideal for businesses, entrepreneurs, and organisations to meet their constant and high transactions easily. Unlike a Savings Bank Account, a Current Bank Account usually does not generate interest on the balance you maintain. Instead, the account allows you to make regular business transactions through online and offline modes and provides an overdraft facility in case you witness a scenario of inadequate working capital or funds to run your business.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.