Having a bank account is essential to perform any type of financial activity, no matter who you are, student, working professional, homemaker, businessperson, and senior citizen. Although there is no single person who doesn’t have a bank account. But have you heard that there are various types of bank accounts? In this blog, we will discuss savings account vs current account.
If you are confused about which account is best for you, then you are at the right place. In this blog, we are going to discuss what a savings account and a current account are, the features of both accounts, the difference between savings account vs current accounts, some similarities, and which account is best for you.
What is a savings account?
What is a current account?
Features of both accounts.
Types of both accounts.
Difference between savings and current account.
Similarities between savings and current account.
Top 10 countries saving account interest rate
Which one is the best
What Is A Savings Account?
A savings account is a common type of bank account where you can save your income and earn interest on it. You can deposit your money that you do not need currently but may require some time later (in the future). These accounts are not made for daily transactions; you can save your money in the account for a long time to collect interest.
What Is A Current Account?
A current account is also known as a demand deposit account (demand deposit account is a bank account that offers access to your money at any time without advance notice). The current account is a bank account where you can save and withdraw your money. These accounts are opened by people in business, traders, entrepreneurs, etc., who have a higher number of regular transactions in the bank. It includes deposits, withdrawals, and contra transactions(When a debit and credit have a net zero impact on the same parent account and are recorded as a counter entry, the account is affected)
Also read: What is the importance of net present value.
Features: Savings Account Vs Current Account
- Bank pays a fixed interest on your deposit in the savings account.
- The minimum balance in savings accounts is lower as compared to current accounts.
- For future emergencies, interest deposited by banks is beneficial.
- Saving accounts develop saving habits.
- Savings accounts have no restrictions on the amount of deposit and withdrawal.
- There is no limit to managing your savings account.
- This account is suitable for business people, traders, entrepreneurs, etc.
- There is no limit on transactions.
- This type of account does not pay interest on your deposit.
- An overdraft facility is available on the current account.
- A KYC document is required for a current account.
- The current account requires a higher minimum balance.
The Best Saving Accounts For Kids
Types: Savings Account Vs Current Account
- Regular savings account.
- Zero balance and basic saving account.
- Women’s savings account.
- Kids savings account.
- Senior citizen’s savings accounts.
- Family savings account.
- Salary account (salary-based savings account).
- Standard current account.
- Premium current account.
- Packaged current account.
- Foreign current account.
- Single column cash book (If you hold a business without maintaining a bank account, then this is for you).
Difference Between Savings Account Vs Current Account
Here are some differences between a savings account vs current account.
|s.no||Savings account||Current account|
|1||A savings account is a deposit account that allows limited transitions.||Current account is used for daily transactions.|
|2||It is suitable for salaried people who have a regular and monthly income.||It is suitable for businessmen, traders, entrepreneurs, etc.|
|3||A savings account provides an interest on deposits.||Current account does not provide any interest on deposits.|
|4||There is a limit on the number of transactions in savings accounts.||There are no restrictions on the number of transactions in current accounts.|
|5||The minimum balance limit in savings accounts is lower||The minimum balance limit in the current account is higher.|
|6||There is no overdraft facility available in the savings account.||An overdraft facility is available on the current account.|
Similarities: Savings Account Vs Current Account
After knowing the difference between a savings account vs current account, let’s know some similarities between savings account vs current account.
- Both accounts are helpful in managing your money.
- Both accounts are designed to address your various financial needs.
- Savings and current accounts include internet banking, ATM, debit cards, single and joint account facilities, etc.
- There is no specific limit on your deposit.
- There are many different kinds of savings and current accounts available.
Top10 Countries’ Savings Account Interest Rate
Here are the top 10 countries offering the highest interest rates on savings account deposits.
Which One Is The Best: Savings Account Vs Current Account
Savings account and current account? Which one is best for you? It’s a tough question, but first of all, you must select an account suitable for you according to your needs and preferences.
Think about your income. If you have a regular and monthly income and you want to deposit it in an account or earn interest on it, the savings account is for you.
Due to compound interest, your money will grow over time if you keep it in a savings account.
If you have a large sum of money to deposit, then a current account is a better option for you as compared to savings accounts. But the bank does not pay any interest on current account deposits.
A current bank account, however, might be more useful if you plan to regularly take money from your accounts every month, especially if you’ll require access to extra services like check-writing and overdraft protection.
So before you open an account, note your needs and preferences. Then find a suitable account for you.
There are several benefits of having a savings account vs. a current account. The type of account that you choose depends on your needs, capacity, preferences, wants, requirements, and income. Which account is best for you? Both accounts are important for performing everyday transactions and building savings.
Que1.what is the advantage of saving account?
– Savings accounts are easy to open.
– You can withdraw and deposit money anytime at ATMs in 24 hours.
– Many savings accounts can be started for just $25, so you can start your account with minimum balance.
– You are not locked in for any period, which means you can switch savings accounts as you want.
Que2. What is the advantage of a current account?
-These account holders can deposit cash or cheque at different bank branches.
-There is no limit on transactions.
-An overdraft facility is also available on the current account.
Que 3. What is the disadvantage of a savings account?
-Interest rate is lower in savings accounts as compared to other accounts.
-savings accounts have minimum balance requirements.
-Savings account interest rates are variable, it means that financial institutions are free to set and change interest rates according to their terms and conditions.