Savings Accounts v/s Current Accounts : Difference Between Savings & Current Account | AU Small Finance Bank
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What Is The Difference Between Current And Savings Accounts | AU Small Finance Bank

Difference between Current Account and Savings Account

    Savings Account and Current Accounts are types of bank accounts that serve specific purposes. Today, anyone can open a Savings Account to deposit surplus income and earn interest on it. At the same time, the Current Account is specifically meant to meet the banking needs of business entities and entrepreneurs who may need to carry out multiple transactions every day.

    This blog will explore the finer differences between Savings Account and a Current Account.

     

    What is a Savings Account?

    It is the most basic Bank Account type that you can open with any bank or financial institution. A Savings Account lets you park your idle money, thus keeping it safe. Depositing funds is the best option rather than hiding them in your home’s locker, where the chances of theft are more.

    Whenever you open a Savings Account, the banks generally give you a Debit Card that offers easy access to money through ATM withdrawal, plus you can also get your hands on offers by top brands.

    Opening a Savings Account also helps you earn interest on your deposited funds. For instance, AU Small Finance Bank, which is the largest Small Finance Bank in India offers AU Savings Account that lets you earn high interest rate, which is credited to your account directly through Monthly Interest Payouts.

    Read More: - Monthly Interest Payout on Savings Account

     

    5 Advantages of a Savings Account:

    1. Safe Storage of Funds: A savings account provides a secure place to keep your money, protected by the bank and often insured, offering peace of mind.
    2. Liquidity: Savings accounts allow easy access to your funds through various channels like ATMs, cheques, and online banking, ensuring liquidity and convenience.
    3. Interest Earnings: While the interest rates may not be high, savings accounts provide a modest return on your deposits, contributing to your savings growth over time.
    4. Emergency Fund: Savings accounts are an ideal platform for building an emergency fund, providing a safety net during unexpected situations.
    5. Financial Discipline: Maintaining a savings account encourages responsible money management, helping you set aside a portion of your income for saving.
     

    What is a Current Account?

    A Current Account is designed for businesses to manage daily transactions like cheque issuance, deposits, fund transfers, withdrawals, etc. Every individual who wants to start a business must open a Current Account with a bank. The account can be operated by public and private companies, proprietaries, associations, trusts, etc.

     

    5 Advantages of a Current Account:

    1. Business Transactions: A current account is specifically designed for businesses and allows you to conduct various financial transactions required for your business operations, such as paying suppliers, receiving payments from customers, and managing daily expenses.
    2. Unlimited Transactions: Unlike savings accounts, current accounts usually come with no or high transaction limits, allowing you to carry out numerous transactions without incurring extra charges.
    3. Overdraft Facility: Many current accounts offer an overdraft facility, which allows you to withdraw more money than the balance in your account, up to a pre-approved limit. This can help you manage temporary cash flow challenges.
    4. Business Banking Services: Current accounts often provide additional business banking services, such as the issuance of business cheques, online banking platforms tailored for businesses, and merchant services to accept card payments.
    5. Business Growth: A current account provides a separate platform for managing your business finances, enabling you to track your business's income and expenses separately from your personal finances. This separation is crucial for monitoring business growth and ensuring accurate financial reporting.
     

    Difference Between Savings Account and Current Account

    A Savings Account is different from a Current Account in many aspects. Below are some of the key pointers:

    • Purpose of opening the account

    There are several reasons why people open a Savings Account. Some people want to secure their funds, save for short-term goals, or simply want to build up an emergency corpus. Savings Accounts help you to earn high-interest payouts. On the other hand, the primary purpose of having a Current Account is to conduct frequent business/financial transactions.

    • Minimum balance in accounts

    In the case of a Savings Account, you must maintain a minimum balance. If you fail to maintain the required amount, the bank may levy Non-maintenance charges and you can also choose to opt for a lower AMB maintenance account. Similar is the case with the Current Account, but the minimum balance requirement is generally lower than in a Savings Account.

    • Interest earnings

    Under Savings Account, interest on savings is earned by the account holder, but in a Current Account, you don’t get interest pay-outs as the deposited money is used for business transactions. If you open an AU Savings Account, you can earn high interest rate.

    Read More - Savings Account Interest Rate

    • Suitability

    So, with a Current Account vs. Savings Account, which one is suitable for you? A Savings Account is suitable for you if you are a salaried employee or someone with a continuous monthly income. If you are running a business, a Current Account will be suitable for you.

    • Transaction Limit

    Transaction limit is one of the main differences between a Current Account and a Savings Account. You have a transaction limit when you use a Savings Account. You can carry out about three to five transactions per month with a Savings Account without attracting any charge.

    You can transact without limit with a Current Account. This is because a Current Account serves entrepreneurs who need to carry out frequent transactions.

    • Overdraft Facility

    When it comes to managing finances, the choice between a Savings Account and a Current Account can significantly impact your ability to navigate unexpected financial challenges. A Current Account offers the advantage of an overdraft facility, allowing you to withdraw more funds than the available balance, providing a safety net for businesses and entrepreneurs. In contrast, a Savings Account typically lacks this feature.

     

    What are the benefits of a Current Account and Savings Account?

    Let us learn what are the benefits of a Current Account and Savings Account. Both account types have their distinct features and benefits.

    Depending upon the requirement you may have from a bank account, you can select any one kind of bank account over the other. You can open a Savings Account to make savings and a Current Account to carry out your regular business transactions.

    While a Savings Account is a great account option to save and manage money for a salaried individual or a household, a Current Account is ideal for a sole proprietor or a business entity required to make multiple daily business transactions.

    By opening an AU Savings Account with AU Small Finance Bank, you can avail several benefits. You can apply for various products like Mutual Funds, Demat Accounts, Insurance, etc. Current Account users can avail of the Overdraft facility, with the amount decided based on your three-month turnover in the Current Account and the average balance maintained.

    So, now that you know the difference between a Savings Account and a Current Account, you can get started with the account opening process instantly. Visit your nearest AU Small Finance Bank Branch to open a Savings or Current Account.

    If you prefer digital, with the help of our AU Video Banking facility, any 18+ individual with the necessary KYC documents can open a Savings Account online too. All business enterprises can apply for a basic Current Account online by filling out the online form. We will then contact you to complete the documentation.

     

    How To Choose Between A Current Account Vs Savings Account

    Choosing between a Current Account and a Savings Account involves considering your financial habits and goals. A Current Account suits business owners and those with frequent transactions, offering unlimited transactions and an overdraft facility for flexibility. Conversely, a Savings Account caters to personal savings, with interest on your balance, though limited transactions encourage consistent saving.

    Businesses benefit from Current Accounts, while Savings Accounts focus on personal financial security. Some individuals even opt for both to manage personal and business funds separately. Explore associated fees, interest rates, and services when choosing a bank.

    In the end, the choice depends on your unique needs. Evaluate whether you require transactional flexibility for your business or want to save and earn interest for personal goals. Both accounts have their advantages – make the decision that aligns with your financial journey.

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    FAQs

    Q1: What is the difference between a Savings account and a current account?

    A: The primary difference lies in their intended usage. A Savings Account is designed for personal savings, offering interest on your balance and limited transactions. It encourages individuals to save money for future needs. On the other hand, a Current Account is tailored for businesses and entrepreneurs who require frequent transactions. It provides flexibility with unlimited transactions and often includes an overdraft facility.
     

    Q2: What is the purpose of a savings account vs. a current account?

    A: The purpose of a Savings Account is to facilitate personal financial goals. It encourages individuals to save money, earn interest on their balance, and have access to funds when needed. A Current Account, on the other hand, serves businesses and professionals who need to manage daily transactions, payments, and receipts without the limitations of a Savings Account.
     

    Q3: What are the similarities between Current and Savings Accounts?

    A: Both Current and Savings Accounts are types of bank deposit accounts that allow you to safely store your money. They offer the convenience of transactions through various channels such as ATM, online banking, and mobile apps. Additionally, they provide security for your funds and are regulated by banking authorities. While they share these common features, their key differences lie in their purposes, transaction limits, and services offered.

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