The habit of saving was evident throughout the history of mankind as we read that people stored grains, precious metals and weapons in temples and palaces in the earliest civilizations. In the current scenario, banks have become the commercial centers that help people save their earnings.

Thanks to the technology for making saving easier and accessing our hard-earned money through easier means. Many of us might have been confused about what to choose ‘Savings or Current’ while withdrawing money from an ATM for the first time. What exactly do they mean and what are the differences? Read on to find out!

What is a Savings Account?

A savings account is opened by individuals to store their money to carry out various transactions. It can also be opened jointly with another member. A savings account does not have an expiry date and can be closed only when the account holder wishes for the closure.

There are different kinds of savings accounts such as regular savings account, salary savings account, zero balance account, savings account for women, minors and senior citizens. Each has different features and benefits.

What is a Current Account?

A current account is exclusively for people who run businesses and involve in day-to-day transactions. It can be either opened in the name of the business or the owner who manages it. A current account can be opened by institutions, trusts, big, small, medium and micro business operations, associations etc. This is one of the best ways to keep track of your business growth and transactions.

Interest Rate

Savings: After RBI deregulated the interest rate on savings account, banks could fix the interest rate on the savings accounts. The rates differ for each bank and it is calculated and deposited periodically to the customer’s account. The interest rate on savings account generally ranges between 4% to 6%.

Current: This account does not get interest on the amount parked as per RBI guidelines.

Transactions and ATM Withdrawals

Savings: A person holding this type of account can do only limited online transactions and ATM withdrawals per month. Banks charge penalties on crossing the limited numbers.

Current: Generally, any business may have to do a large number of financial transactions. Hence banks allow unlimited online transactions. This could be taken as a compensation for not providing any interest on current account. Similarly, ATM withdrawals are unlimited as per RBI guidelines.

Minimum Balance

Savings: Regular savings account will attract penalty for non-maintenance of minimum average balance per month. The amount to be maintained depends on the banks. Private sector banks usually have a higher minimum balance requirement when compared to public sector banks. However, there are ‘no-frills’ savings account that allow the customer to have zero balance. Salary savings account which is given to the employees is generally a zero-balance account. But it will be converted to regular savings account if the regular salary is not deposited.

Current: When compared to savings account, current account will have to maintain a high amount as minimum balance to avoid additional charges. There are no zero-balance account available in this category.

Overdraft Facility

Savings: Not available

Current: The customers can get overdraft facility under this account and withdraw money more than the amount parked. The overdraft is adjusted with interest when money is deposited back later. This can help the business manage the fund deficit.


Knowing the differences between savings and current accounts, you can open whichever suits your convenience and purpose.