Answer By law4u team
The main difference between a savings account and a current account lies in their purpose, usage, and features. Both are types of deposit accounts offered by banks, but they serve different financial needs. 1. Purpose Savings Account: Meant for individuals to save money and earn interest on their deposits. It encourages personal savings and is ideal for salaried people, students, pensioners, etc. Current Account: Meant for businesses, firms, companies, and professionals who have frequent banking transactions. It is used more for day-to-day operations than for saving. 2. Interest on Deposit Savings Account: Earns interest (usually between 2.5% to 4% per annum, varies by bank). Current Account: No interest is paid, as it's not meant for saving but for transaction convenience. 3. Transaction Limits Savings Account: There may be a limit on the number of free transactions (especially in non-home branches or ATMs). Current Account: Allows unlimited transactions (deposits and withdrawals), suitable for high-volume business operations. 4. Minimum Balance Requirement Savings Account: Lower minimum balance requirement (some accounts offer zero balance). Current Account: Higher minimum balance (varies by bank), and penalties may apply if not maintained. 5. Overdraft Facility Savings Account: Generally no overdraft allowed (except in some cases like salary accounts). Current Account: Overdraft facility is commonly available, allowing businesses to withdraw more than their balance up to a limit. 6. Target Users Savings Account: Individuals, students, retirees, salaried people. Current Account: Businesses, traders, firms, companies, self-employed professionals. 7. Bank Charges Savings Account: Usually fewer charges and fees. Current Account: Banks may impose more service charges due to higher transaction volume and additional facilities. In Simple Terms: A savings account is for saving money with some interest. A current account is for doing business, with flexibility in transactions but no interest.