This article is answer to one of our reader’s question about what is the difference between savings account and current account?. This is very common confusion among most of the bank’s customers that what is the purpose of savings account and the current account. Some companies maintain current account for the employees apart from the savings account for crediting non-salary related money to that account. Employees would have thought that why don’t use savings account for the transactions and why there is separate current account for them. This article explores the very basic difference for both the accounts. If you have any questions, please write it in the comments section.
As the name indicates, this account is meant for the savings. Any individual can open the savings account singly or as a joint account. He can maintain a minimum balance of specified amount, this is vary among the PSU banks and private banks. If the minimum balance is not maintained, a charges will be levied from the balance amount or will be adjusted as the negative balance. Savings bank account carry a interest rate for the deposits in the bank account. This interest rate is de-regulated and vary for each bank. Most of the banks offer 4% as the standard interest rate for the savings account. Saving account is operated by salary earners, small traders and others.
If you are doing many transactions with high amount in the savings account, banks has the right to ask the source of income for the transactions. If the total amount of transaction is above Rs. 10 lacs for a year, bank will report to the IT department.
Current account is mainly for the firms, organizations, companies and public enterprises. Current account can not be opened by the individual to deposit their savings. It is mainly for the purpose of business operations. There is no interest paid on the amount deposited on current account. Also there is no restriction on number of transaction in the account. One can do transaction for any amount in the current account, banks will not have right to monitor the current account. (Refer HDFC Bank Current Account)
Look into the below table for the overview of difference for savings and current accounts.
I hope you have the basic idea on savings account and current account. If you have any questions, please write it in the comments section.