Whenever you need to make Bill payments like Groceries, Electricity, or making payments to your Friends or Family or any other payments. Every time you have to pay you should the Daily bank limits. And in such a situation, you might feel that we need to have a Bank account with no daily limits.
Banks will offer such types of accounts for their customers.
Simply, whether a Savings account or a Current account, which is better? If you want to know which account is more useful, you have to spare 2 minutes of your time and read this thread in full.
Let’s See what is the difference between current account and savings account..!!
The Savings account is a Deposit account. In this, you can only make Limited transactions.
The Current account is for those who make Daily transactions with Unlimited daily transactions.
To whom Savings account is suitable?
The Savings account is the best suitable for Individuals and Salaried employees who have a Monthly income. Individuals can use their Savings account, to get Salary credited, Bill payments, and also to Save, Deposit, & to Invest money.
To whom Current account is suitable?
The Current account is for Traders as well as Entrepreneurs. Hence, the current account is suitable for business people who make daily business transactions.
Because businessmen have to make regular payments to Firms as well as to Companies. And also, they have to pay huge amounts. In such a case, it is not possible to transact by looking at the daily NEFT, and RTGS limits, so a Current account is the best option for them.
3. Minimum Balance requirement
How much Minimum balance should be maintained?
The Minimum balance to be maintained in the Savings account is very low. Banks are also offering zero balances for some savings accounts.
For Basic Savings bank accounts in SBI & SBI Basic Small Savings account, you are not required to maintain a minimum balance.
Of course, a few of the banks insist customers to maintain a Minimum balance of Rs.5,000/- or Rs.10,000/- depending upon the place of living like Metro / Urban / Semi-urban, etc.,
In the case of the Current account, a slightly higher amount has to be maintained as a minimum balance as compared to the savings account.
In SBI, the Regular Current account is opened then the Monthly Average Balance (MAB) has to be maintained at Rs.5000. Also this MAB will change as per the business purpose for which you take for your current account.
If you look at SBI, there are many types of current accounts as well, along with the regular current account, Gold current account, and Diamond current account, and lot more
4. Overdraft facility
Suppose you have Rs.2,00,000/- rupees in your bank account. But you have to send Rs.2,50,000/- to your friend who is in Banglore. You can’t send Rs.2,50,000/- through your Savings account. You can send only Rs.2,00,000/-.
The reason is through the Savings account you can’t pay even an extra one rupee than your balance.
But using a Current account, banks offer a facility to pay more money than the money available in your account. This is called the Overdraft facility.
Apart from that, money in your savings account from banks or financial institutes will pay you only 4-6% nominal interest.
Whereas, in the case of current accounts they do not offer interest payments because in the current account, you might have Rs.1 crore on one day and Rs.1 lakh on another day.
Thanks for reading the article of “what is the difference between current account and savings account”
Author is a Qualified CMA with rich industry experience for more than 6 years. He is an All India Ranker (AIR-101) in CMA and also a Semi-Qualified Chartered Accountant having a quite good experience in teaching the subjects of Accounting and Costing to the commerce aspirants.