Before you embark on your banking journey you must know some of the basic details to make your financial path smoother and free flowing. We all have some idea about the two major types of bank accounts- the savings account and the current account, but most of us have the same question - what is the difference between savings account and current account? We are here to help you know about the two basic types of bank accounts and the basic differences between the two.

What Is a Savings Account?
A savings account is a basic kind of bank account that enables you to save money, keep it protected, and withdraw money all while gaining interest. Savings accounts presented by most banks, credit unions, and other financial institutions mostly pay interest on the deposits made by the account holders. Some savings accounts offer higher interest rates than others.

What Is a Current Account?
An account at a bank or financial institution from which funds may be withdrawn without giving any prior notice to the bank typically an active account catering for regular deposits and withdrawals by bank cheque. Current bank accounts primarily cater to the needs of business owners, self-employed and private enterprises.

These are zero interest accounts and generally have no limit on transactions. However, besides usability, the primary difference between current account and savings account is in terms of earning interest.

What Is the Difference between Saving Account and Current Account?
People starting their banking journey need to know about the difference between current and savings accounts to make the suitable choice for their banking necessities.

Purpose: The fundamental objective of a savings account is to help individuals deposit a part of their income and gain interest on the available balance. This account is primarily used to pay bills for utility services, household, personal expenses, and, of course, savings. Current accounts allow a high level of liquidity because they serve as a repository for general business transactions.

Suitability: Any individual can use a savings account for their personal needs. However, a current account is meant primarily for traders, organizations, firms, corporations, etc.

Interest Rate: Banks offer interest on the deposited amount in the savings account. However, the interest rate is reasonable, and it is generally between 2 to 4.5% per annum. Interest is calculated on the daily outstanding balance, but in most cases the amount is credited to the account every quarter. However, the interval when the interest will credit varies with banks or financial institutions.

In contrast, banks do not offer any interest on the collected amount in the current account.

Minimum Balance (Average Monthly Balance): Like the interest rate, the minimum balance fundamentals of a savings account vary from one bank to another. The account holder must maintain a minimum balance to avoid paying a fine.

However, Kotak offers zero balance account where the Monthly Average Balance (MAB) is waived off. You can open your account online without visiting the bank and earn up to 3.5% interest rate yearly on your savings.

The current account minimum balance requirement is higher than that of the savings account. This balance is subject to changes depending on the banks.

Transaction Limit: The Central Government has taken several measures to counter black money. In this respect, Section 269ST under the Finance Act 2017 capped daily cash transactions to Rs.2 lakh. You might have to pay a certain amount after you cross the threshold.

However, there is no set limit to transactions for the current account. For instance, 811 Edge Account offers free cash transactions of up to Rs.2 lakh per month, whereas its current account has a limit of withdrawing cash from the ATM of up to Rs.1 Lakh per day. Free NEFT and RTGS transactions are available for up to Rs.50 lakh per month.

See the table below for the better understanding of the difference between current account and savings account. The table will help you remember the vital distinguishing pointers between both savings and current account.


Savings Account

Current Account

Interest earned

Earns interest

No interest is earned


To save and keep emergency funds

Business transactions


Zero to low minimum balance

High minimum balance


For any individual

For business owners, companies, firms, etc.

Both these accounts serve different financial needs. You need to choose the one that suits your requirements. Hope this article resolves your queries regarding the difference between current account and savings account.

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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.