Savings Account vs
Current Account
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07 AUGUST, 2023
Savings Account and Current Account are two different types of account a bank offers. While the former is for personalised savings, the latter is more suited for enterprises and individuals who need to carry out frequent business transactions.
Key Features And Difference Between Current Account And Savings Account
Purpose
A Savings Account is used for personalised savings, for addressing liquidity needs, payments, investment of Individuals.
On the other hand, a Current Account is structured for companies, self-employed professionals, proprietors and partnership firms to carry out business transactions. Please Note that using Saving Accounts for business transactions is not allowed would result in paying high fees or charges /penalty.
Interest Earned
Money in a Savings Account earns a rate of interest which differs across banks. Interest earned on Savings Account up to Rs. 10,000 is exempt from taxation and the interest income above that is added to your income and taxed accordingly.
Current Account doesn’t fetch any interest. You can use all modes of payments for transactions like electronic/ Digital or cheque transactions and also, you can withdraw money from a Current Account from ATMs when needed.
Free Transaction Limit
There’s a cap on the number of free transactions you can carry out in a month from your Savings Account. Just like rate of interest, it differs across banks. If you go beyond the number of permissible transactions, you will be charged for the transaction.
This is not the case with a Current Account. As this is designed for conducting business, Unlimited number of transactions are allowed in Current Account. Since businesses need to conduct transactions for a range of needs, there’s no limit on the number of transactions that can be carried out in a month from a Current Account.
Also, as a Current Account customer, you get a large number of free cheques per month compared to a Savings Account holder.
Additional Read: What eligibility criteria must you meet before opening a Current Account?
Overdraft Facility And Other Services
This is another feature of a Current Account. There are occasions when you might need to draw more money than what’s available in your account.
When you do so, your account is said to be overdrawn. A Savings Account doesn’t offer this facility, but a Current Account does. Also, services such as making and accepting payments via point of sale (POS), QR codes and transaction portals, among others, are available in a Current Account but not in Savings.
In Conclusion
Both Savings and Current accounts have their specific purposes. While the former helps you park your savings, the latter aids in taking care of day-to-day business transactions.
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