Difference between Savings Account and Current Account
| Before opening an account at a bank, it is important to know clearly which type of account best suits your needs. If you want to open an account to save money to meet future needs and want to earn income from those savings then there is nothing better than a savings account. However, if you are an individual or entity who wants to open an account that can be operated many times during the working day, then a checking account is the best.
While savings accounts are mainly preferred by clubs, associations, individuals, trusts, etc. Current accounts are intended for individuals, business entities, government entities, associations, trusts, institutions, etc.
To understand it better, read this article to the end to get complete knowledge about the difference between a savings account and a checking account.
Definition of a Savings Account
Savings Accounts are the most common type of savings account. Accounts held by commercial banks to encourage savings and investment are known as Savings Bank Accounts. Savings accounts provide various facilities such as ATM facilities as well as Debit Cards with different variants, daily interest calculations, internet banking, mobile banking, online money transfers, etc.
The account can be opened by any Individual, Agency or institution, except Pvt. Ltd. and Ltd. the company is not allowed to open a savings account.
Also read: The difference between saving and investing
Definition of Current Account
A savings account maintained by any commercial bank to support money transactions is often known as a Demand Deposit Account. A large number of facilities are provided for you, when you select a checking account like payment on fixed instructions, transfer, overdraft facility, direct debit, no limit on withdrawal/deposit amount, Internet Banking, etc.
This type of account meets the needs of organizations that often require money transfers in their day-to-day activities. A checking account is also known as a transactional account.
Difference between Savings Account and Current Account
The difference between a savings account and a checking account can be clearly withdrawn for the following reasons:
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Savings is an account that is intended for people who save their money to meet their financial needs in the future. A Current Account is an active account which is intended for day-to-day monetary transactions.
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Savings accounts aim to encourage saving of the general public while checking accounts support frequent and regular transactions of account holders.
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Savings accounts are suitable for salaried people and groups of people such as clubs, trusts, associations of people, etc., for regular savings. On the other hand, current accounts are very suitable for business entities, government departments, communities, institutions, etc. because they have to deal with daily money transactions
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In the case of a savings account there is a limit on the number of daily and monthly transactions, ie if the transaction limit exceeds the specified limit, a fee may be charged. There is no limit to the Current Account, essentially there is no limit to the number and number of transactions.
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Current checking accounts do not bear interest, but savings bank accounts earn interest, which is usually 4-8%.
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A passbook is provided by the bank in the savings bank account which lists the debit and credit amounts to, from that account as well. Meanwhile, there are no passbooks issued by banks to current account holders.
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Bank overdraft facility is provided only for checking accounts and not savings accounts.
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The opening balance required to start a savings account is very small. On the other hand, Current Account requires a high amount as an initial balance, to start an account.
Those are some of the differences between a savings account and a checking account. Hopefully the article above is useful for you. Thank you for visiting and don’t forget to share it with your friends too.
