Every time we go to an ATM center, we get a doubt about what to choose a SAVINGS ACCOUNT or CURRENT ACCOUNT. So, this article is to tell you the difference between savings and current accounts.
A savings account is the once which is mostly chosen by the monthly salaried employees. Low & Middle-class families are the ones who use the savings bank account. There are some important differences that we need to know definitely.
For a savings account, there are some extra provisions and few disadvantages over the current account holders. The monthly transactions of a savings account holder can do is only 3 to 5 times in your bank ATMs and 3 times in other bank ATMs. If we want to do transactions more than that, we need to pay extra money which the banks will deduct from our account.
The main advantage of the savings account is we get interested in what we are saving in our account. Based on the banks, the interest rates vary from 4% to 6%. Since these accounts do not allow unlimited transactions it is easy for the customers to acquire more interest when they save money for a long period of time.
Minimum balance is the minimum amount of money that must always be in your account in order to prevent it from de-activating or lapsing. For Savings accounts, the minimum balance required is usually low. The Savings Account of an individual can attract a penalty if he/she fails to maintain a prescribed minimum balance in his/her Account. The concept of minimum balance is applicable in Current Account as well. The minimum balance requirement for Savings Accounts is generally on a lower side while that of the Current Accounts is relatively higher.
Now let us discuss the Current account
The current account is mainly for business persons, firms, companies, public enterprises. This is useful when a person does a number of business transactions on a daily basis. Current Account is designed to facilitate regular or frequent transactions.
Current accounts do not have any limit on the maximum number of transactions that one can carry out. This is primarily because Current accounts serve the purpose of carrying out frequent transactions.
In the case of current accounts, banks usually do not provide any interest. This is due to the fluid nature of the account which allows frequent transactions.
Unlike the savings account, the current account holders need to maintain a comparatively higher amount than that of the savings bank account. The fines imposed on the current
bank account holders for not maintaining minimum balance is also higher than that of the
savings bank account holders.
The Current Account extends the overdrawing facility to its holder. When the holder deposits back the money which was withdrawn earlier, such deposit is adjusted with interest. This feature of the Current Account helps its holders in managing their fund deficits.