If you have a bank account, you must have heard the terms “saving account” and “current account”. The majority of us are unsure of what these are and how they differ from one another.
What is a saving account?
An interest-bearing deposit account held at a bank or other financial institution is referred to as a savings account. It is a deposit account made to store money that you don’t intend to use right away.
The Savings Account is a transactional interest-bearing account where a deposit is made with the Bank for an uncertain length of time.
What is a current account?
The Current Account is a non-interest bearing transactional account where a deposit is made with the bank for an arbitrary amount of time. It is a transactional, non-interest bearing account that is primarily designed for business entities like corporations, firms, NGOs, and INGOs.
Businessmen who conduct a greater volume of regular transactions with the bank open current bank accounts.
Saving Bank Account VS Current Bank Account (Key Differences)
Savings bank accounts (SB or SBA) and current bank accounts (CB or CBA, sometimes also called checking accounts) are two major types of banking accounts. Though both are meant to keep your money in the bank with all your banking transactions, they have their own scope of using it.
|Saving Bank Account
|Current Bank Account
|Meant for keeping money as saving deposits and fewer transactions: Non-Liquid Transactions.
|Meant for businesses where there will be more number transactions: Liquid Transactions.
|4 to 6% annual interest is paid on the quarterly average balance on each financial quarter.
|No interests will be paid by the bank.
|No Overdraft: The account holder can’t withdraw money more than the available balance.
|Overdraft allowed. Users can withdraw more than the available balance, within a limit set by the banker.
|Most banks will set a minimum balance in the SB account and 5-15 transactions on other bank ATMs per month, except for the Salary account.
|Not required to keep the minimum balance on CB Account.
|In most banks, there will be a maximum amount of transactions that can be made. For example, you can do a maximum of $10000 amount of transactions per year. Crossing that, can result in paying extra charges.
|In some banks, the account must cross the minimum amount of transactions per year. For example, if you can’t make a minimum of $10000 of transactions on your CB Account, you must pay some fees, as set by the bank.
|Generally used for Salary accounts and personal account holders. The account holder’s name will be the person’s name as on documents like PAN Card.
|The current account will be created in the name of the organization. The account holder’s name will be the organization’s name as on the PAN Card of the company, for example.
|Examples: Personal banking account, Corporate Salary account, etc.
|Examples: Account on the name of Company, Firm or non-profit organizations, etc.