What is the Difference Between Current Account and Saving Account?

The main differences between a current account and a savings account are their purposes, transaction limitations, interest rates, and account management fees. Here is a comparison of the two types of accounts:

1. Purpose: A current account is designed for daily transactions, such as receiving salaries, paying bills, and making purchases. It allows unlimited inflows and outflows, making it suitable for traders and entrepreneurs. On the other hand, a savings account is designed for storing money and earning interest, typically used by salaried employees or those with a monthly income.
2. Transaction Limitations: A current account holder can withdraw money any number of times in a day, while a person can withdraw money from a savings account only three to four times in a month. Some savings accounts may have a monthly limit on how often you can withdraw money without paying a fee.
3. Interest Rates: Savings accounts generally earn interest at a rate of around 4%, while current accounts do not earn interest. In fact, current account holders may have to pay the bank to maintain the account.
4. Account Management Fees: The minimum balance required to maintain a savings account is usually low, but for a current account, it is much higher in comparison.
5. Overdraft Facilities: In the case of a savings account, banks neither offer nor allow overdraft facilities, whereas, this facility is provided with a current account.

In summary, a current account is suitable for daily transactions and is typically used by businesses and entrepreneurs, while a savings account is designed for storing money and earning interest, catering to salaried employees and those with a monthly income.

Comparative Table: Current Account vs Saving Account

Here is a table comparing the differences between a current account and a savings account:

A current account is designed for daily transactions and is most suitable for businesses, while a savings account is designed for limited transactions and is most suitable for individuals to save money. Current accounts do not provide interest, whereas savings accounts provide interest on the deposited amount. The minimum balance required for a current account is higher compared to a savings account. Additionally, an overdraft facility is provided for current accounts but not for savings accounts.