Bank accounts are the basic accounts that people hold to receive funds. It acts as a safe outlet to keep received funds and to also use it for various financial transactions. The needs of each customer are not the same and banks provide different types of accounts for people to meet their needs.
A savings account is the most basic account for people. You can get receipts into this account, make payments and use it for automatic financial transactions. It pays 4 per cent interest on the balance. There are different types accounts like zero balance saving account, Jan Dhan account, kids saving account, saving account for trusts and educational institutions. Each account has its own characteristics. The account holders can also access their bank account through internet and mobile banking.
A current account is an account which provides more liquidity as compared to a savings account to the account holder. This account primarily exists to provide funds for the ad hoc liquidity requirements of the user. These types of accounts are generally meant for businesses. To attract businesses, many banks customise their current account offerings so that they can provide the services that the business needs for their funds.
There is a major difference between saving account and current account. The current account meaning is the availability of liquidity. However, this liquidity comes at a cost. The current account holder does not get any interest for the funds kept in this account. In contrast, a savings account holder gets a nominal rate. Apart from this difference, there are other differences between these two basic banking accounts.
Difference between saving account and current account:
Number of withdrawals:
A savings account can make four withdrawals in a month. In contrast, there are no such restrictions on a current account. There are no restrictions which is why businesses park their funds there.
Cash management system:
Depositing cash into a savings account may not be allowed from other branches or from branches in other cities. However, current accounts have a specific cash management system where cash and cheques can be collected at local and regional branches with credit to the account at no extra charge.
Current account holders can withdraw any amount. They can even withdraw over and above the balance in their account if they have the overdraft facility enabled. On the other hand, savings account holders can withdraw up to INR 40,000 from an ATM from their home bank and up to INR 10,000 in an ATM of another bank.
Minimum balance requirements:
There are no minimum balance requirements for a current account. On the other hand, savings account has a minimum balance requirement. This minimum balance ranges between INR 2,500 to INR 25,000 depending on the bank.
Banking services and charges:
Banks issue additional cheque books to current account holders free of charge. Apart from that, they are allowed free demand drafts every month. These services are chargeable for a savings account holder. In case of businesses that have a large volume of payments to be made, banks provide a special payment gateway where the business must upload a batch of payments and it will be processed by the bank.