Savings vs Current Account
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Personal Finance
- Swati Tripathi
- 2022-12-10
- 03 min read
#current account
#savings account

Are banks usually confusing to you? Do you occasionally find yourself scratching your head over banking accounts(savings account vs. current account) and other terms and jargon? Well, we’re here to help you out!

Whether you’re living alone or with your parents; whether you’re a student, a fresher, or learning your grips on a business, you need to understand the basics of the banking system.

We’ve spoken about the importance of having a bank account earlier… this time, we are here to clear the difference between types of accounts.

If you’ve come back from the branch not knowing the difference between a savings account vs. current account, and which one is more suitable for you, this piece is just for you!

So, each of these accounts serves a specific purpose. Based on that, each has its own sets of facilities and benefits. Every bank offers a similar set of services on an account, more or less.

Also read: Evolution of Banking

The choice between the two hinges on your requirements. Take a glance at the details of both, savings and current accounts here to understand it better:


Savings account – As the name suggests, this is a separate account for depositing your savings with the bank.

Current account – The account that is used for daily/regular transactions is a current account.

Also read: What is an IPO (Initial Public Offering)?


Savings account – The fundamental purpose of a savings account is to deposit money to be parked aside as SAVINGS. This money is to be kept for the future, for definite purposes. It is to be used judiciously for required big and essential expenses, and not used entirely in one go.

Current account – A current account is opened for conducting recurrent transactions of large or small amounts. Money needed for day-to-day business operations is kept in this account. There is no saving here, as the prime intention here is to keep the money rolling.

Suitable for:

Savings account – If you’re a student, an employee, or want to park some money aside for investments or big purchases, this account is apt for you.

Current account – Businesses, firms, and companies use current accounts. It has fewer restrictions on the usage of money.

Minimum balance:

Savings account – When opening a savings account, most banks require maintaining a minimum balance in it. This is to instill a habit of savings, and for having to be mindful of your spending pattern. Without this, the whole purpose of a savings account is defeated.

Current account – There is no such condition of maintaining a minimum balance in a current account since it is meant for business transactions. Huge sums of money are credited and used time and again.

In fact, there’s an additional overdraft facility given on current accounts – where you can withdraw/utilize an amount more than the deposit in the account. This is provided at a basic rate of interest for ease of business since the amount fluctuates frequently and drastically.

Frequency of transactions:

Savings account – the frequency of transactions is relatively lower than a current account so that there’s a substantial amount available at all times for essential purposes like investments, big purchases, or simply creating a contingency reserve.

Current account – the frequency of transactions is obviously high in a current account since it is used for daily business operations. Every amount needed, large or small, is used from this account.


Savings account – Since you are depositing your money with the bank, they pay you a fixed rate of interest (usually ranging around 6% p.a. in most banks). At the end of a specified period, the interest is credited to the account.

Current account – No interest is paid on a current account since the amount of deposit keeps changing every single day, and the main purpose is conducting transactions and not savings.

The last word

If you’re wondering which of these is a better choice, there’s no singular answer. Each account has its own purpose and its own advantages. It all boils down to your expense needs and lifestyle/business requirements.

We hope this helps you make an informed choice on it.

Also read: Everything you need to know about saving schemes


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