Difference between Current Account & Savings Account

Basis of DifferenceCurrent AccountSavings Account
ObjectiveTo conduct frequent financial transactionsTo save for emergency fund and short-term goals
Suitable for WhomBusiness personSalaried person
Interest IncomeNoYes
Transaction LimitYou can transact without limit or very high limitLimited Monthly Transactions are allowed
Minimum Balance RequirementNil, or lower than in a Savings AccountYou need to maintain a minimum balance
Overdraft FacilityGet OD facility in order to meet out unexpected financial challengesNo
Nomination FacilityNot availableAvailable

Let us understand the difference between Current Account & Savings Account in more detail.

(1) Objective

The main objective of current account is to entertain maximum number of transactions and opened for carrying out day-to-day activities and payments while savings account encourages customers to make more savings. Individuals open savings account to deposit their savings or for getting their salary credit.

(2) Eligibility: Who can open?

Savings Accounts are opened by the individuals mainly by salaried persons & HUFs whereas Current Accounts are opened by Non-individuals like Proprietors, Partners, Companies, Trusts, Associations, etc.

(3) Interest on Deposits

Savings Accounts offer periodic interest on deposits which ranges between 3.5% to 7% while Currents Accounts generally don't offer any interest. However, some banks have started offering low interest now-a-days.

(4) Overdraft (OD) or Cash Credit (CC) Facility

Current Accounts offer Bank Overdraft or Cash Credit facility to the customers whereas Savings Accounts don't offer such a facility to the customers.

(5) Minimum Account Balance (MAB)

Minimum Account Balance is the minimum amount that you are required to maintain in your Savings Account every month/quarter as specified by the banks. A higher Minimum Account Balance needs to be maintained in Current Account as compared to that of Savings Account. The limit of the same is decided by the banks and differs from bank to bank.

(6) Number of Transactions

As the Current Accounts are opened with an objective of carrying out very frequent transactions, they don't usually put any cap on number of transactions. Savings accounts usually put a limit on the maximum number of transactions which ranges between 3 to 5 transactions per month. After crossing these limits, the customers need to pay charges on additional transactions done by him.

(7) Nomination Facility

Nomination Facility is available in Savings Account but it is not available under Current Account. Nomination can be done by mentioning the details of the nominee in the specified space in the application form. Nomination is important because it makes sure that the account proceeds are transmitted to the nominee without any hassle on the event of death of the account holder.

(8) Opened for

Current Accounts are normally opened for making business transactions as the volume of transactions in a current account is very high while Savings accounts usually are used for salary accounts and making small savings.

(9) Restrictions on Withdrawals

Current Accounts usually come with fewer or no restrictions on the number of withdrawals however there are some restrictions on the number of withdrawals in case of Savings accounts.