Differences and Similarities Between Savings and Current Account
Most banks have a provision for creating a current as well as a savings account. Both types of accounts have different uses and features. These features are meant to make it easier for the account holder to make the best use of their account. You can open both accounts using a digital banking app. Both kinds of accounts have different facilities and usages. Let us first understand the difference between the two:
- Purpose
A current account is meant for everyday transactions, while a savings account only allows limited transactions. You can safely deposit your savings in a savings account without having to interact with it regularly. You can digitally open a savings account and a current account.
- Best for
A current account is most appropriate for business owners or traders or merchants who have to constantly withdraw and deposit money into their accounts. On the contrary, a savings account is preferred by people with jobs, a salaried monthly income. It is easier to pay bill online with the help of a current account.
- Interest rates
Current accounts do not offer interest on your deposit amount. While savings accounts do give you interest on your deposit. The interest rates for savings accounts differ from bank to bank although, you can open savings account, and you will generally earn interest from 3.5% to 6% on your deposit amount on an annual or bi-annual basis. It is preferable to open a savings account in a bank which offers the best interest rate.
- Minimum Balance
Both kinds of accounts require a minimum balance you need to keep to sustain it. While the minimum balance for both types of accounts isn’t extremely high, they differ from each other. A savings account has a minimum balance that is much lower than that of a current one. The minimum balance also depends on the bank and the account type.
- Transactions Allowed
The transactions in a savings account are limited as compared to a current account. It permits you to withdraw and deposit money every day. While a savings account is not made for everyday transactions as the purpose of it is saving and depositing money. In a savings account, there is a limit of transactions per day set by the RBI. On the other hand, a current account lets you make multiple transactions in a day without any issues.
Now let us understand the similarities between the two types of accounts:
- Both accounts are available for your use and to help you control your financial situation.
- Both types of accounts can be accessed through a mobile banking app and internet banking, and you can use and manage your accounts through it.
- Other than the minimum amount required to be deposited in each account, there is no upper limit to how much you can deposit.
- There are various types of savings accounts as well as current accounts in every bank that you can choose from depending on your convenience.
