Among the four different types of accounts in India, it is the savings bank and the current accounts that see maximum traction. But many people are still not fully aware of the differences between the two.As a result, confusion abounds when people go to withdraw money from the ATMs. Serving totally different purposes, these two types of accounts come with different objectives and uses. To understand them, it is essential to know their definitions.
What is a current account?
A current account is a type of deposit account that allows recurrent money transfers on a daily basis. With regards to facilities, it offers a wide array ranging from disbursement on standing instructions, overdraft facility, transfers, direct debits, internet banking and no restrictions withdrawals and credits, among others. It could be opened by a company, an individual, or even a Hindu Undivided Family (HUF). Like all other forms of bank accounts, this too comes with its own set of account maintenance charges. Apart from its more common name of current a/c, it is also called a transactional or checking account.
What is a savings account?
Of the four types of deposit accounts, the savings account is considered to be the most common of them all. This account type is basically used for the purpose of fortifying investments and savings. Some of the services that an account holder enjoys by virtue of having a savings a/c include mobile banking, debit card facility, online money transfer, credit of interest and so on. While a private company and even a public limited one are not allowed to open a savings bank account, this form of deposit account could be opened by institutions, agencies and individuals.
Key differences between the two forms of deposit accounts
Given below are some key differences that you would encounter with thesetwo popular account types
While savings accounts serve the purpose of augmentation of one’s money, current accounts focuses on the advocacy of heavy duty money transactions.The savings form of account is perfect for salaried individuals while the transactional form of a/c is ideal for businessmen.With regards to monthly transactions, savings accounts come with a cap, while there is no such restriction for checking accounts. Last but not the least, savings accounts see the credit of interest from time to time, while current accounts are non-interest bearing in nature.
Despite the stark differences between a savings a/c and a current account, these two also share certain similarities such as internet banking facility, cheque facility for multi-city, nomination facility and demand deposit option.
Serving two different purposes, these two forms of bank accounts are important in their own right.