Differences Between Current Account & Savings Account | HDFC Bank (2024)

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Differences Between Current Account & Savings Account | HDFC Bank? ›

Savings accounts earn interest at a rate of around 4%, while there is no such earning from a Current Account. A Current Account is actually a no interest-bearing deposit account. When you withdraw more money from the account, than is actually there, then your account is said to be overdrawn.

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.

A current account is a bank account designed to manage your income and day-to-day spending. You can use a current account for: paying your bills. receiving your salary, benefits, pension and other payments.

The main difference between checking and savings accounts is that checking accounts are primarily for accessing your money for daily use while savings accounts are primarily for saving money. Checking accounts are considered “transactional,” meaning that they allow you to access your money when and where you need it.

Account Current is prepared by a creditor to his debtor. Current Account is prepared for the partners of a firm. Account Current records all the transactions between the supplier and customer. Current Account records all the transactions between the firm and partners.

A current account means a form of demand deposit, where withdrawals are allowed any number of times, depending upon the balance in the account or up to a particular agreed amount.

One of the most important features of a current account is the fact that it bears no interest at all. The funds in a current account are always made available to the account holder whenever needed, and to compensate for this extra liquidity that the bank provides, there is no interest charged on current accounts.

Compared to savings account, a current account requires a higher minimum balance. It is designed to facilitate frequent transactions - transfer funds, receive cheques, cash, etc. A current account can be operated by individuals, proprietary concerns, public and private companies, associations, trusts, etc.

No interest or low interest: Traditionally, current accounts do not offer interest, and even if they do, the interest rates might not be as attractive as savings accounts. Minimum balance requirements: Some types of current accounts do have minimum balance requirements, failing which there could be penalties.

What is the difference between a bank and a savings bank? ›

A commercial bank may offer you or your business a savings and checking account, a mortgage, business and student loans and even investment advice. A savings and loan institution specializes in mortgage and home loans and may provide the same kinds of checking and savings accounts as a bank.

Checking account and current account can be used interchangeably. There is no significant difference between the two terms in terms of the basic functions of the account. “Current Account” is more commonly used in the United Kingdom, while “Checking Account” is more commonly used in the United States.

Current Account: There is no cap on number of transactions. Savings account: Suitable for individuals to deposit salaries and also for saving funds for emergencies. Current account: Suitable for business enterprises and institutions that make frequent transactions.

A savings account is most suitable for people who are salaried employees or have a monthly income, whereas, Current Accounts work best for traders and entrepreneurs who need to access their accounts frequently. Savings accounts earn interest at a rate of around 4%, while there is no such earning from a Current Account.

Savings accounts typically have lower fees and provide interest, though at lower rates, while current accounts may come with more fees and offer little to no interest. You can even choose to maintain both types of accounts, tailoring each to your distinct financial needs.

Savings accounts

These often pay a higher interest rate, so the more money you have in the account, the more you can earn. Therefore, if you want to store a large amount of money that you don't need to use for your day-to-day transactions, then a savings account may be better for you rather than a current account.

Banks offering Savings Account facilities generally limit the maximum number of transactions you can conduct monthly. The permitted limit without incurring fees is typically between three and five monthly transactions. However, in the case of a Current Account, there's no limit on the number of transactions allowed.

No interest or low interest: Traditionally, current accounts do not offer interest, and even if they do, the interest rates might not be as attractive as savings accounts. Minimum balance requirements: Some types of current accounts do have minimum balance requirements, failing which there could be penalties.