There is a big difference between current and savings account, which we’re going to explore in this article.
This will include sharing the specific differences, the benefits of both a current account and a savings account, plus how to choose between them.
We will also be answering a number of questions we receive from our members about both current and savings accounts.
This article is part of our series on opening bank accounts around the world, which you can access for free by following the link above.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Difference Between Current and Savings Account
- Benefits of a Savings Bank Account
- Benefits of a Current Bank Account
- Frequently Asked Questions
- Do You Want Help Opening Bank Accounts?
Difference Between Current and Savings Account
The main difference between a current account and a savings account is that a current account is for day-to-day banking while a savings account encourages saving your money over time.
As most people know, banks encourage account holders to save by offering higher interest rates. So, it’s no surprise that current accounts generally offer very little (or no) interest while savings accounts typically offer a much higher interest rate.
That said, current accounts also offer benefits that savings accounts do not. For example, current accounts typically offer a debit card, ATM withdrawals, and multiple transactions per day, while other accounts do not offer these benefits.
In fact, savings accounts usually restrict ATM withdrawals and the number of transactions a customer makes per day, week, and month. Likewise, many banks do not offer debit cards with savings, since it is meant to encourage saving instead of withdrawals.
With this in mind, customers looking for day-to-day banking activities, requiring ATM withdrawals, or looking to make multiple transactions per day or week, will benefit from a current account over savings.
On the other hand, customers looking to save their money with a reasonable interest rate while still maintaining full access, may want to consider savings. Of course, individuals looking for longer-term deposits and higher interest may want to consider fixed deposits, certificates of deposits, or other long-term investment options.
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Benefits of a “Current” Bank Account
The main benefits of opening a current account with a bank include support of day-to-day banking activities through unrestricted access to funds and the ability to write cheques, though cheque writing is becoming less important. Other benefits include accessing funds through ATM withdrawals, access to overdraft facilities, and the ability to arrange electronic withdrawals and deposits.
Here is a closer look at the benefits of opening a current account:
Benefits of a Current Bank Account
- Support of day-to-day banking
- Unrestricted access to funds
- Ability to write cheques
- ATM withdrawals
- Access to overdraft facilities
- Arranging electronic withdrawals & deposits
Benefits of a “Savings” Bank Account
The main benefits of opening a savings account with a bank include higher interest rates and flexible access to deposits. That said, savings are also straightforward to open, have low deposit requirements, offer deposit insurance (depending on the country), and can usually be accessed by both residents and non-residents.
Here is a closer look at the benefits:
Benefits of a Savings Bank Account
- Higher interest rates
- Flexible access to deposits
- Easy to open
- Low deposit & balance requirements
- Deposit insurance
- Accessible to residents & non-residents
Frequently Asked Questions
Below are a few of the most common questions we receive from people looking into the difference between current and savings accounts. If you have further questions you would like to ask our team, don’t hesitate to get in touch.
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 depend on the bank, country, and client profile. For example, in many countries, you can start saving with USD 100 as a local resident, while non-residents will need to deposit USD 5,000. Of course, each bank sets its own deposit requirements, so the specific bank you are considering should be consulted to confirm the required deposits.
Which Is Better, Current or Savings Account?
Whether a current account or a savings account is better will depend on which account best suits your needs. If you are looking for a day-to-day transactional account, then a current account will be best. However, if you are looking for higher interest and intend to save and grow your balance, savings will be the better choice.
What Is the Advantage of Current Account Over Savings Account?
The main advantage of a current account over a savings account is that it can support day-to-day transactions. Additionally, current accounts typically offer unrestricted access to funds, ATM withdrawals, cheque writing, scheduling of automatic withdrawals and deposits, unlimited (or a high number of) transactions, and more.
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