Key Differences between a Current Account and a Savings Account

If you are not familiar with banking-related terms, you might face a situation where you are confused about what type of bank account to open. Most people opening a bank account for the first time stumble upon this query: should I go for a Savings Account or a Current Account? While both accounts help you save money, a few features set them apart from each other. Here is a quick guide on the key differences between a savings and a current account.


The purpose of a savings account is to encourage people to save. A savings account is used to deposit income or salary in a safe place like a bank, so that you can withdraw whenever you need to make personal payments.

On the other hand, the purpose of a current account is to facilitate regular and frequent banking transactions. This account is mostly used by traders, shopkeepers, etc., who have a large volume of transactions in a day, which could include receiving or making payments.


Unless you have a zero balance savings account, banks require you to maintain a minimum balance in savings as well as a current account. However, the quantum of minimum balance is usually higher in a current account than in a savings account.


A current account is usually for business purposes where there are large number of deposit and withdrawal transactions in a month. Which is why banks usually do not give any interest on funds in a current account. On the other hand, in a savings account, you earn interest on the funds held in the account. The interest amount is usually deposited in the account once every quarter.

Overdraft facility

When banks allow you to withdraw more money than you have in the account, it is called an overdraft facility. It is like a mini loan on which banks levy an interest like any other credit facility.

Typically, banks do not offer overdraft facility on savings accounts, mainly because it is for savings purposes. However, it is not the case with a current account. Reason? Businessmen make frequent transactions through their current account. Sometimes, there is not enough money in the account to meet the payments. At such times, to meet the gap and to avoid the disruption of the business flow, banks allow overdraft facility with a current account.


One of the features of the current account is that there is no limit on the number of times you can withdraw funds in a day. However, there is a limit on the number of times you can withdraw funds from your savings account. If you exceed the limit, you might be charged a nominal fee.

The basic difference between a savings account and a current account is the purpose and the customer it is targeted at. While a savings account is for long-term or regular savings, a current account is for daily / frequent transactions. Therefore, it is important to assess your needs and requirements before you pick one of the two.

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