Savings Account vs Current Account – Know the Difference

By Laxita Gautam
  | Published: 13 May 2021
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Two of the most common kinds of accounts that you will come across when attempting to open a personal account in any bank per se are current account and savings account. Often a rather confusing set of terms, these two accounts are similar yet different in more ways than just one, making it a little difficult for most people to differentiate between these two. Let us tackle this long-sustained confusion between the two and break down the basic definitions, features, and differences between savings and current accounts. 

Savings Account – What are the Basic Features?

As evident by the name, a saving account is primarily designed to help the account holders save the deposited funds. The bank helps account holders in doing so by offering several small benefits on the saved or deposited money which in turn urges account holders to save more and hence deposit more. This type of account also comes with very few limitations such as withdrawal limits which are imposed to make sure that account holders are not urged to withdraw often or in large quantities. This ultimately results in larger deposits. The minimum balance required to keep your savings account running is quite low. Here are some of the top features of a savings account 

Suitability of Savings Account – A savings account is best suited for and is mostly used by working professionals who receive a monthly salary or income. They can also be used by business owners who are looking to open an additional account for the purpose of setting some money aside. Savings accounts are also often used as salary accounts by many people. 

Earns Interest on the Deposit – Savings account generally have a pre-determined interest rate which is applicable on the deposited money in the account. This means that the more money you keep deposited in the account, the more profit you earn on your savings in the form of interest. The interest rates on savings accounts can range anywhere between 0.25% to 3% in UAE depending on banks. 

Limited Transactions – Savings account come with a maximum transaction tab on them which prohibits the account holders to make more than a set number of transactions or withdraw more than a certain amount in a month. Banks also do not allow savings account holders to avail of the overdrawing facility. Overdrawing means withdrawing more money from the account than it contains. 

Current Account – What is it and Who is it for?

A current account is an account that is opened to make daily transactions which makes it suitable and a go-to option for businesses, firms, companies, public entities, etc. A current account is opened when an entity requires making regular fund transfers in a day multiple times which is the case for all businesses. The attraction of current accounts is the freedom of transaction and fluidity that they offer. Current accounts require a rather high minimum balance in order to function without penalties. Following are the top features of a current account:

Designed for – Current accounts are designed for businesses and organizations as an entity or business owners who need to make frequent transactions during a normal day. A current account is generally used for work purposes only rather than a personal account like savings accounts. 

Freedom of Transactions – Unlike a savings account, a current account does not come with a cap on transactions and fund transfers. The account holder can move as much money as they want, as many times a day as required without any limitation. 

Overdrawing – A current account holder is generally allowed by the bank to avail of overdraft services which is seldom allowed in the case of savings accounts. 

No Earned Interest – There is no interest paid by the bank on deposits made in a current account. 

A Quick Overview of the Difference 

Take a glance at the following table to quickly understand every basic thing that differentiates savings account from current account:

Parameters

Savings Account

Current Account

Rate of Interest (earned by account holders on balance)

Available and differs as per bank standards

Not available

Transactions

Limited (differs for each bank)

Unlimited transactions allowed

Suitable for

Individuals as a personal account

Business People, companies, public enterprises, etc.

Used for

Saving and building deposits

Making regular transaction for everyday use

Minimum Balance Requirements

Low

High

Overdraft Facilities

Not Available 

Available

Laxita Gautam
Laxita Gautam21 Posts

Senior Content Writer | She functions on classic British fiction, Japanese manga, and strong americanos. Laxita is tailor-made to create engaging, interactive pieces that offer simplified insights into complex subjects.