In this article, we’re exploring the difference between savings and current accounts in India.
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Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- What Is the Difference Between Savings and Current Accounts in India?
- Should I Open a Savings Account or a Current Account in India?
- Frequently Asked Questions
- Do You Want Help Opening Bank Accounts?
What Is the Difference Between Savings and Current Account in India?
The main difference between savings and current account in India is that a savings account encourages account holders to hold and grow their money while a current account is used for transactional banking purposes. For this reason, most bank customers tend to have both a savings account and a current account.
Of course, there are other differences between savings and current accounts. Though, the majority of these differences do stem from the underlying goal of the accounts, being to encourage saving and facilitate transactions.
For example, savings accounts offer higher interest rates, have restrictions on the number of withdrawals that can be made each month, and may limit the ways that funds can be withdrawn (e.g. outbound transfers).
On the other hand, current accounts tend to offer very low (if any) interest rates, have very few restrictions on transaction activity, and can facilitate withdrawals or transfers via most popular methods.
With this in mind, if you are looking to save money and earn a higher return on your deposit, a savings account is best for you. Alternatively, if you are planning on making frequent transactions, and withdrawals, or not looking to maintain a high balance, you may want to consider a current account instead.
It’s also important to point out that the differences between a savings and a current account in India are the same as elsewhere in the world. That said, certain countries do use different terminology, such as in the United States where transactional accounts are referred to as checking accounts.
Should I Open a Savings Account or a Current Account in India?
Whether you should open a savings account or a current account ultimately depends on your specific goals for the account. That said each bank has different requirements when opening both savings and current accounts, which may dictate the accounts that you can access. With this in mind, you should check with your bank and confirm you can access your preferred account type before applying.
Here is a close look at both a savings account and a current account in India, so you can understand the difference and decide which is best for your needs.
Savings Bank Account
Savings account refers to a bank account that encourages account holders to save money for future use. In most cases, savings accounts offer high-interest rates and incentivize regular deposits. However, savings accounts typically have disincentives as well, such as penalties or fees for withdrawing above certain transaction limits.
Current Bank Account
Current account refers to a bank account that facilitates transactional banking. This can include both sending and receiving transactions, such as income, regular day-to-day expenses, and more. Not surprisingly, current accounts usually do not restrict transaction activities, though they do not encourage saving because they rarely offer interest that is comparable to savings accounts.
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Frequently Asked Questions
Below are three of the most common questions that we receive from people looking into the difference between savings and current account in India. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
What Is the Required Minimum Balance for a Savings Account in India?
The minimum required balance for a savings account in India will vary by bank. However, there are several banks that allow Indian residents to open accounts with no initial deposit. In other instances, account openers may be asked to make an initial deposit between 500 and 5,000 rupees, depending on the bank.
What Are the Benefits of a Current Account?
The benefits of a current account include the ability to send and receive transfers, write checks, support for frequent transactions, and more. In short, current accounts are better for individuals and businesses looking to carry out transactional banking activities.
Are there Any Disadvantages of a Current Account?
Yes, there are disadvantages to a current account, though the specific disadvantages will depend on your bank and the terms of your account. For instance, in many cases, banks will limit the number of checks you can write per month, they may charge fees for extra transactions, and they may have specific deposit requirements.
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