Friday, May 24

5 Differences Between Current Account and Savings Account

A current account and a savings account are two distinct types of bank accounts that serve different purposes. While both are offered by banks in India, they differ in various aspects. In this article, we will discuss the five differences between a current account and a savings account.


A savings account is designed to help customers save money, earn interest on their deposits, and use the funds for personal expenses. The primary objective of a savings account is to encourage saving and discourage excessive spending.

On the other hand, a current account is specifically meant for business transactions. Current accounts are used by businesses, companies, and entrepreneurs for their daily financial transactions, such as paying suppliers, receiving payments from customers, and maintaining liquidity. Current accounts do not provide any interest on deposits as they are not meant for saving. Furthermore, you can easily open a current account online.

Minimum Balance Requirement:

Savings accounts have a minimum balance requirement, which means that customers need to maintain a certain amount in their accounts to avoid penalty charges. In India, the minimum balance requirement for savings accounts varies from bank to bank and can range from as low as Rs. 1,000 to as high as Rs. 25,000.

On the other hand, current accounts have a higher minimum balance requirement compared to savings accounts. This is because current accounts are meant for businesses that have a higher volume of transactions and require more liquidity. In India, the minimum balance requirement for current accounts can range from Rs. 10,000 to Rs. 1 Lakh, depending on the bank and the type of current account.

Transaction Limits

Savings accounts have transaction limits in terms of the number of withdrawals and transfers that can be made in a month. In India, most banks allow a maximum of four withdrawals per month for savings accounts. If the customer exceeds this limit, they may have to pay additional charges.

In contrast, current accounts have no transaction limits as they are meant for business transactions. Businesses can make unlimited transactions, including deposits, withdrawals, and transfers, without incurring any penalty charges.

Interest Rates

Savings accounts offer interest on deposits, which can vary from bank to bank. In India, the interest rates on savings accounts range from 2.5% to 3.5%. The interest earned on savings accounts is generally calculated on a daily or monthly basis and is paid out annually or semi-annually.

In contrast, current accounts do not offer any interest on deposits. This is because current accounts are meant for businesses that require liquidity and frequent transactions, rather than savings.

Fees and Charges

Savings accounts may have some fees and charges, such as penalty charges for not maintaining the minimum balance requirement, charges for additional withdrawals beyond the limit, and charges for using the ATM of another bank. However, most banks offer a certain number of free transactions per month.

In contrast, current accounts have higher fees and charges compared to savings accounts. This is because businesses require more services and facilities, such as checkbooks, overdraft facilities, and cash deposit and withdrawal services. Some of the common fees and charges for current accounts in India include annual maintenance charges, transaction charges, and charges for using other banks’ ATMs.


In summary, a savings account and a current account are two different types of bank accounts that serve different purposes. While savings accounts are meant for personal savings and transactions, current accounts are designed for businesses and entrepreneurs. Therefore, it is essential to choose the right type of bank account based on your financial needs and requirements. It is also important to compare the fees, charges, interest rates, and other terms and conditions offered by different banks before opening an account.