Let’s understand the difference between ‘Savings bank account’ vs ‘Current bank account’.
Growing up we have time to time heard our parents talk about bank and finance stuff that went way above our heads, no? All these heavy-money terms seemed to be a whole other language! While then it wasn’t much of a concern to not be familiar with these, at this age, the significance’s shifted, heightened basically. As a teen, only a few steps away from adulthood, it is extremely essential to be familiar with, at the very least, the basics of financial and money management concepts and terminologies, and banking facilities, as it is this early understanding that makes for a solid foundation for your upcoming financially-active years.
Understanding of commercial banks, bank accounts, and the types of accounts is amongst the very first few levels of financial learning and honestly, super easy. So what say, up for it?
For this read, we’re going to go through two very prevalent types of bank accounts Savings and Current Accounts. We bet you must have heard about these quite a lot no —at home, while shopping and just everywhere.
- What is Savings Account?
- Features of Savings Account
- What is a Current Account?
- Features of Current Account
Sounds like something you’re curious about? If there’s a nod, scroll through!
What is Savings BankAccount? (As per Indian Banks)
The name gives it away, doesn’t it? Savings account is a bank offering – a type of deposit account that, like others, allows you to deposit money. What makes it distinct are its features and the resulting purpose of usage. It is used to hold your momentary excess post keeping the regular expenditures aside. It acts as a safe stay for your funds for a decent while, hence the title ‘savings’, though still offering the holder the luxury of liquidity. The highlight feature that makes this account a promising destination and an ideal choice to stash funds for a longer period of time, and something that essentially draws the difference is that it comes with the opportunity of earning interest over the deposited fund. Monthly Income in the case of salaried people makes for a good fund-example for these!
Savings Accounts differ from Deposit Accounts as these don’t put any withdrawal restrictions such as time frame.
Taking a glance at a little while ago, do you remember that thing called a passbook? While it’s not in actuality ancient history, the tech tsunami has more or less taken over it. It was in these passbooks that financial transactions of the savings accounts were recorded, unlike now where the transaction history comes in handy even on WhatsApp, all thanks to Internet banking.
For a fun example, think of a regular Savings Account as a hotel! It’s not like you’re moving into it; you just enjoy a lil casual stay.
Features of Indian Savings Bank Accounts
Now, let’s see what else savings bank accounts got there—
- As discussed above, holders enjoy an additional stream of income via the interest earned on their savings account, which is a significant plus –we mean sitting and making money, sounds like a dream!
- Minimum balance requirements often enter the picture when it comes to savings accounts. Basically, you may be, most likely, required to maintain a certain balance in your account. In instances where one fails to uphold the minimum deposit, some monthly fees are implied. It is best advised to abide by the requirement in order to not exhaust most or any interest earned on these fees.
- After a minimum, next in order is a maximum. Savings account polices the number/amount of withdrawals in a statement cycle and often an additional cost or fee is charged when the limit is exceeded.
- While savings account is not one to have a chequebook attached to it, some banks do provide savings accounts with checkbook kinda product. Even despite the eligibility, some limitations tag along too.
- Overall savings accounts are great safes for regular surplus and at the same time come with the perks of sustaining liquidity as well as generating little something through the means of interest.
What is a Indian Bank Current Account?
Try taking the hint from the name itself. To an extent the opposite of a Savings Account, Current Account is a bank offering that is to accommodate your everyday transactions. Also widely addressed as a bunch of names –Checking Account, Chequing Account (hint again!), Transaction Account, etc. and falling under Demand Deposits, Current Account readily makes funds deposited for daily transactions available to be withdrawn ‘on demand’. Allowing frequent transactions and famous for its ‘liquidity’, it hosts easy cash withdrawals and hence is preferred for regular transactions.
A few for instances could be –shopping, movies, household bills, food, and more.
It offers the current bank account holder the liberty of making unlimited transactions every day, in addition to making a withdrawal of cash highly accessible and instant to them via the means of ATMs, cheques, debit cards, or even e-transfers.
The early traces of Current Accounts and ‘cheques’ can be found way back in the 1500s in Holland, owing to the high volume of trading and shipping taking place.
Features of Current Bank Accounts
Hopping on to discover what more Current Accounts have to offer—
- No limitation. Yes! Current Accounts are a tad bit less strict when it comes to the deposit and even the withdrawal; it goes easy on the frequency of your transactions. In fact, a current account likes it when you wholeheartedly deposit, which is why it is widely considered to be a great fit for those having a good load of transactions every day such as traders or businessmen.
- The current account comes with chequebook facility to execute withdrawals, payments, and transactions. Cheque facilities make payments made on regular basis more convenient and safe by eliminating the need to actually carry cash to pay.
- An additional facility provided here is the overdraft facility. Um, what’s that you may ask? It is a bank granting or rather lending to you by allowing you to withdraw more than the balance that you have in your account. Basically, the bank being your true bestie and covering for you amidst transactions.
Though it is essential to note that different banks provide different kinds of services as well as varied extents of services.
Hoping that gave you a clear idea of the differences between savings and current accounts. Honestly, wasn’t so tough to gulp, no? Savings Accounts and Current Accounts are both extremely simple yet fundamental. It’s something that you’ll need to know and will have to use all your life hereon. Guess next time you can be a part of your parent’s everyday bank conversations and it might all actually make sense to you!