In this article, we’re exploring the differences between a current account vs savings account.
This article is part of our series on banking basics, ranging from opening different types of bank accounts around the world to understanding how various aspects of the banking system operate.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Current Account vs Savings Account
- Benefits of Opening a Current Bank Account
- Benefits of Opening a Savings Bank Account
- Frequently Asked Questions
- Do You Want Help Opening Bank Accounts?
Current Account vs Savings Account
The main difference between a current account and a savings account is that a current account is a transactional account while a savings account is a deposit account intended for accumulating savings over time.
As a result, there are differences in features, benefits, liquidity, and banking services that can be drawn when looking at a direct comparison between these two account types.
Additionally, savings accounts tend to offer interest rates on the balance of the account while most current accounts do not.
Not surprisingly, having a current account and a savings account as an individual is important in terms of proper financial management. Likewise, ensuring that you are using both accounts correctly is an important step in personal finance.
While the term current account is primarily used in the United Kingdom and members of the commonwealth, the United States and several other countries refer to current accounts as a checking account.
Benefits of Opening a Current Bank Account
The main benefits of opening a current bank account include full access to funds, few restrictions on debit card transactions and ATM withdrawals, support for electronic deposits and withdrawals, ability to send and receive international transfers, and more.
Here is a closer look at the benefit of opening a current bank account:
- Full access to account balance
- Few restrictions on debit card transactions
- Few restrictions on ATM withdrawals
- Support for electronic transfers
- Support for electronic deposits
- Online account management and access
Benefits of Opening a Savings Bank Account
The main benefits of opening a savings bank account include interest accruing on the balance of the account, reasonable access to funds when necessary, supports personal finance and savings goals, and more.
Here is a closer look at the benefit of opening a savings bank account:
- Interest accruing on the balance of the account
- Reasonable access to funds when required
- Supports personal finance and savings goals
- Access to funds through debit and ATM withdrawals
The specific benefits that you will be able to unlock from either a current account or a savings account will vary by bank. So, be sure to directly compare the account opening options before choosing which account to open.
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Frequently Asked Questions
Below are a few of the most common questions we receive from people looking into the difference between a current account vs savings account. If you have further questions you would like to ask our team, don’t hesitate to get in touch.
Similarities Between Current and Savings Accounts?
The similarities between a current and savings account is that they are both bank accounts that can be opened by individuals or businesses at a wide range of financial institutions. Additionally, certain banks will offer similar benefits with both a current account and a savings account, including debit card access, withdrawal access, and more. However, it’s important to note that savings accounts typically have more restrictions, which is why it’s usually best to open both a current account and a savings account.
What Is the Required Minimum Balance For a Savings and Current Account?
The required minimum balance for a savings account and a current account will differ both by bank and jurisdiction. That said, most mainstream banks offer local resident savings and checking accounts with a nominal opening deposit. In fact, in many cases, a checking account can be opened with no deposit at all.
What Are the Disadvantages of a Current Account?
The disadvantages of a current account include no or low interest rates applied to the balance, monthly fees, transaction charges, atm restrictions, and more. That said, the specific fees, restrictions, and interest will vary by bank and account type. Likewise, the disadvantages will vary by jurisdiction as well.
Can I Use a Current Account for Personal Use?
Yes, a current account can be used for personal use. In fact, in most cases, individuals should have a current account to support day-to-day personal transactions. That said, in addition to a current account, individuals should also have a savings account in order to earn interest and accumulate savings.
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