Two types of accounts are opened in the bank, Savings and Current Account. Both bank accounts are used for deposits and transactions. But the features of both are quite different from each other. Generally people do not know much about their features, due to this they get confused between savings and current accounts. Let us tell you their difference
This is called savings account. Any person can open this account for saving. Whatever amount is deposited in it, the bank gives interest on it from time to time. Salaried employees and common people mostly open savings accounts.
This is called current account. Like savings account, deposits and transactions are also done in it, but no interest is given in it. Current bank account is for those customers who transact large amounts of money regularly. It is mostly opened for business. It can also be opened by a startup, partnership firm, LLP, limited liability company, limited liability company etc. It does not have many of the restrictions that are there in a savings account.
Know the features of savings and current account
- A minimum balance is mandatory on both savings and current accounts. In savings account, you still get the option of not maintaining zero balance account and minimum balance in salary account, but this option is not available in current account. Also, the minimum balance of a current account is slightly higher than that of a savings account.
- There is a limit on the number of transactions that can be done in a month in a savings account, but there is no such limit in a current account. Apart from this, there is also a limit on the maximum amount to be kept in the savings account, whereas there is no such limit in the current account.
- Interest is earned on deposits in savings account and the interest income received by the customer is subject to income tax, whereas no interest is earned in current account, hence it is out of the scope of tax.