Current and Savings Accounts are two different types of Bank Accounts. Each has distinct uses and characteristics. When your aim is to maximise your savings, you can conveniently open a Savings Account with your preferred bank. On the other hand, opening a Current Account can help meet the banking needs of entrepreneurs and business entities who need to carry out several daily transactions. Here are the differences between these two accounts.
About Savings Accounts
A Savings Account is generally the most basic Bank Account you can open with a bank. It lets you keep your idle funds safe and earn interest at a specific rate your bank decides. Depositing your money in this account can be a better alternative than hiding it in a locker at home where the funds might be stolen.
About Current Accounts
A Current Account is a Bank Account designed for businesses to handle their daily transactions. This could include fund transfers, withdrawals, deposits, and more. Opening a Current Account is often considered a must for individuals who want to start businesses. This account lets traders, firms, etc., manage high-volume business expenses and transactions. Current Accounts can be opened by partnership firms, public limited companies, societies, individuals, trusts, etc.
Differences between Savings and Current Accounts
Current and Savings Accounts differ from each other in the following ways:
- Purpose
People open a Savings Account for multiple purposes. Some use it to keep their funds safe. Others might want to utilise it to build an emergency fund or save for their short-term goals. This account lets you store your funds and earn interest at a particular rate. Conversely, the goal of opening a Current Account is to carry out frequent financial or business transactions.
- Suitability of the account
A Savings Account suits salaried employees or people with a continuous monthly income. It can also be valuable for people who want to save money for their short-term financial goals, like paying for a wedding or saving for a future vacation. On the other hand, businesses and companies that carry out regular money transfers can open a Current Account.
- Interest earnings
Savings Accounts allow holders to earn interest on the money they maintain in the accounts. This enables them to grow their money in the long run instead of keeping it idle at home. On the other hand, Current Accounts are meant for business transactions and are usually non-interest-bearing accounts. Hence, you do not earn interest on the balance you maintain in this account.
- Overdraft facilities
Current Accounts typically offer the advantage of an overdraft facility. This feature lets you withdraw more funds than the available balance in your account. This acts as a safety net for businesses and entrepreneurs. However, Savings Accounts usually lack this feature.
Conclusion
Now that you know the differences between Current and Savings Accounts, determine your needs and opt for an account that matches them.