Difference Between A Savings Account And A Current Account


People get confused when they think of opening a new account. They can’t figure out whether they should open a savings account or a current account. Even when at an ATM, there comes an option to choose if your account is a savings account or a current account, most people ponder about it for a few seconds. Savings accounts and Current accounts are the most common deposit products of the bank and one should open an account based on their banking needs. Here’s a brief description of the two types of accounts that will come in handy when you are deciding which type of account to opt for.

Savings Account

As the name suggests, a savings account is a deposit account that helps you to inculcate the habit of saving for longer-term and rainy days. These savings can help you with sudden expenses such as wedding expenses, travelling, or in some event of an emergency. Banks provide a fixed interest rate on a savings account that typically ranges between 3-6%. This type of account is commonly used by individuals who receive a monthly payment and deposit their salaries to save for their future. The minimum balance that needs to be maintained in a savings account is comparatively lower than that of a current account. Although, there’s a limit on transactions that an account holder can make. There’s even a cap on the number of withdrawals from the ATM in a month which is usually between 3-5 based on the bank that you’ve opened an account with. They charge you a nominal fee after you’ve surpassed the number of withdrawals to encourage you to save. In order to facilitate the people to open an account with the bank, the banks are coming out with various products like the zero balance account. 

Current Account

A current account is also known as a financial account that is most commonly used by firms and entrepreneurs who need to access their accounts quite frequently and make transactions almost on a daily basis. There is no cap on the limit of transactions one can conduct if he/she holds a current account. There are no restrictions on the number of withdrawals or deposits either and have several other features including an overdraft facility. An overdraft facility is unique to a current account where you can withdraw more than what you have in the account. Although you do not get any interest in a current account and even the minimum balance that you need to maintain in your account is higher as opposed to a savings account. If you are a trader or an entrepreneur and you might need to make frequent transactions, you should go ahead with a current account. 

Difference between a Savings Account and a Current Account

There are a few criteria based on which we can distinguish between a savings account and a current account and they are mentioned below.

Interest Rate

Banks provide an interest rate when you open a savings account which ranges between 3-6%. You receive this interest based on your average balance on the 10th of every month and is usually credited to your account in the months of February and August every year. On the other hand, you do not receive any interest in a current account.


A savings account is best suited for individuals who want to develop a habit of saving and depositing their salaries every month that will come in handy in the future whereas a current account caters to firms, traders, and entrepreneurs who might have to make daily transactions. 

Monthly Transactions

A current account has no cap on the number of transactions an account holder can make which is not the case in a savings account. Saving accounts usually charge a nominal fee once you’ve surpassed the limit of transactions. This is done to encourage the account holder to save. 

Minimum Balance

When you open an account, you are supposed to maintain a minimum balance. In a savings account, the required minimum balance is low whereas the required minimum balance in a current account is comparatively higher.

Savings account and Current account constitute the CASA segment of a commercial bank that is treated as their core deposit. Banks accept deposits and lend to people. Higher the CASA, lower the rate of interest. They maintain a deposit which they can use as a floating fund to attract more current account deposits. In recent times, some banks have even started providing interest rates on current accounts under a separate scheme on a selective basis to big corporates for the same purpose. Nowadays, banks also use the savings account and current account customers for cross-selling of various products like insurance, mutual funds, etc. as these customers have a long relationship with the bank.

Leave a Reply

Your email address will not be published. Required fields are marked *