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What is the difference between saving and current bank account?


Date: 06 Nov 2012   Posted By: Paresh Gujarati     Group: Finance and Investments    Category: Banking   

Hello members,
I want to know the basic difference between saving account and current bank account in terms of interest rate and its functionality. Who can be eligible for current account? Why current is name given to that type? Also, what is the difference between recurring bank deposit and fixed deposit?


Want to know about the differences between savings bank account and current account? Learn more about the difference of SB and current accounts here.


Author: [Anonymous]    06 Nov 2012      Member Level: Bronze     Points : 2  (Rs 1)    Voting Score: 0

Current Account
IN this account you can do many transaction in same day or in a month
in current account you can also use your much money to transact or withdraw.

Savings Account
Savings account is like a few facilities like you can do only some few transaction i think 25 within a month & you cant deposite more than 50000 k & cant withdraw same money.


Author: Vaishali Solanki    06 Nov 2012      Member Level: Silver     Points : 8  (Rs 6)    Voting Score: 0

There are mainly 4 types of account that a bank may offer to its customers, they are:-
1. Savings Bank A/c
2. Current Bank A/c
3. Recurring Bank A/c
4. Fixed Deposit A/c

1) Savings Bank A/c
This is the most common account of all that a bank may provide. The amount deposited in savings bank A/c is the income left after spending for the customers expenses. The customer receives an interest which is calculated on daily basis and credited on half yearly basis. The interest rate vary bank to bank.
2) Current Bank A/c
Current bank A/c is an Account whose customers are businessmen, it may include companies, enterprises, firms etc. In current bank A/c unlimited number of transaction could be performed on a day. Banks charge for the service provided to its customers and usually no interest is paid on current bank A/c savings, but some bank are now even providing interest on it due to competition.
3) Recurring Bank A/c
Recurring bank A/c is specially for salaried people where one may deposit only on a particular day and the interest rates are slightly higher than that of savings bank A/c.
4) Fixed Deposit A/c
In fixed deposit A/c an amount is deposited for fixed time period and the interest rate is higher compared to all the other bank A/cs'. Fixed deposits may be for short term, medium term and long term.


Author: Tulika Devi Nath    06 Nov 2012      Member Level: Gold     Points : 10  (Rs 8)    Voting Score: 0

The basic definitions of a Savings Bank account and Current Account are as below:

Savings Bank Account: An account in which Bank pays interest on the balance amount and transaction is restricted by the bank in terms of amount being transacted or numbers of transactions in a month.

Current Bank Account:Current accounts are normally opened for business purposes. These are highly liquid and have very frequent transactions. Bank normally don’t pay any interest on the amount lying in the account. In stead, it may levy charges for the services it renders to the account holder.

The key differences are listed below:

  1. Numbers of transactions

  2. In case of current account there is no limitation on the numbers transaction that can be done in a particular month. it is a continuing process. Also there is no charge on the amount being transacted. A person can keep an amount of money and can use that money whenever he wants to meet day to day requirements. However a savings account is normally owned for maintaining savings from regular income. There are limitation on number of transactions in a month and anyone cannot make unlimited number of transaction in the savings account. There is also a limitation on the amount that can be deposited or withdrawn from a savings bank account.

  3. Interest paid by Bank

  4. In case of current account a bank does not give any interest on the deposit but bank offers interest on savings accounts.

  5. Facilities offered in each accounts

  6. In case of a current account Current account facilitates the account holder to get overdraft facility but in case of savings account there is no such overdraft facility. The overdraft facility is however restricted by the overdraft limit determined by the bank.

  7. Minimum balance to be maintained

  8. In current account there is no need of minimum balance while in case of savings account minimum balance is mandatory and attracts charges for non maintenance of minimum quarterly balance.

  9. Nos of persons owning the acount

  10. Normally a Savings bank account can be operated by two persons while a current account can be co-owned by more than two persons at a time. A current account can be linked to savings account. Trasactions in both current and savings account are watched by Income Tax Department on regular basis.


Difference between recurring bank deposit and fixed deposit:

Recurring bank deposit: Recurring bank Deposit (RD)account as the name suggest is an account where some amount of savings is regularly deposited on a timely manner. These type of account normally draws higher interest than a savings bank account.

Fixed Deposit: Fixed deposit is a lump sum amount which is deposited in a bank which draws much higher interest depending on the tenure of the maturity.

The key differences between a RD account and Fixed deposit are as below:

Rate of interest:RD accounts are started with small amount of savings which is set aside from the regular consumption while Fixed deposits are relatively higher amount of money. Thus the initiatl investment amount in case of a fixed deposit is higher. Also the tenure of maturity is higher as the depositor looks for considerable gain in interest amount. The amount is normally used to meet regular expenses and deposited with a definite purpose in view.


Author: Manoj Chaurasia    06 Nov 2012      Member Level: Gold     Points : 15  (Rs 10)    Voting Score: 0

Main difference between current and savings bank accounts are as follows:

1. Ownership
Current bank account is opened by business entities or individuals who are doing business. This type of account is used only for business transactions.
Savings bank account can be opened by any individual but cannot be used for any kind of business activities.

2. Interest
There is no interest facility on current account, whereas savings bank account provide minimum of 4% interest on the balance of sum left in the account.

3. Facilities
Nowdays current account as well as savings bank have almost similar or equal facilities but still current accounts have more facilities as compared to savings bank account.
There is no limit to the amount of sum that can be transacted in current account but there is a tab or check on the sum transacted from savings account.

4. Overdraft facility
Current account also have the facility of overdraft which is sometimes provided without any security or sometimes with security but in case of savings account there is no such facility. Savings account can be used only upto the sum deposited in the account.

5. Charges
Current account charges are higher as compared to the savings account as for the obvious reason that they are used for business purpose. While charges on savings account are nominal.

6. Services
Current account get over 100 leaflets chequebook as compared to only 10 leaflet chequebook in case of savings bank. There are many other services to current account as well as extra charges for such services.

7. Others
Current account holders are given more preference as compared to savings account as they transact huge sums in business transaction which in turn is also beneficial to the bank. They also pay huge sums as bank charges and penalty in case of fault to the bank as compared to the savings bank account.

Bank has to pay interest on saving bank account holders but does not pay a single penny to current account holders. It only provides service to them and charges them for such services.
Although bank uses the money of savings bank only for its purpose and earns on the same but pays very little to the account holders.

Now difference between fixed deposits and recurring fixed deposits.

Fixed deposit as commonly known as term deposit is a sum of money deposited with bank for earning interest and the time period of which varies from 1 year to 5 years. Fixed deposits are one time lump sum deposit and can be irregular in nature. It means that anyone can go for fixed deposit once he has spare lump sum money to deposit.

Recurring deposit on the other hand is almost like fixed deposits but differs in its mode of functioning.
Recurring deposits are usually opted by people who have regular income and hence a fixed amount of sum is deducted from their account and transferred to fixed deposit every month. This sum can be in multiples of thousands depending upon the capacity of an individual.
This recurring deposit earns almost equal to the interest rate as provided by a fixed deposit which is one time lump sum deposit. The sum deducted is comparatively small as compared to normal fixed deposits hence do not pose a big burden on the individual opting for recurring deposit.
These recurring deposit also have a fixed maturity period similar to fixed deposits.

Recurring deposits give the benefit of fixed deposits without having to put huge sum into fixed deposits at once.
Recurring deposits are good option for savings, if there is always some spare money lying in savings bank account and accumulating.

Regards


Author: GANESH G BHAT    06 Nov 2012      Member Level: Silver     Points : 10  (Rs 8)    Voting Score: 0

Current Account and Savings Account

Main differences between a Savings bank account and Current bank Account is given below:

Purpose:

Savings account is opened with a bank by individuals for the purpose to save a part of their income.

Current account is opened by businessmen for regular and day to day transactions with a commercial purpose and quick liquidity.

Operation:

Saving account is operated by salaried people, small traders and others.

Current account is operated by businessmen, corporate and organizations.

Interest Rate:

Banks normally gives interest on your balance in savings account which is at present is about 5% to 7%.

No interest paid by the banks for current account balances.

Minimum balance:

To open a savings account, minimum balance is required to be maintained in the account which varies from bank to bank. Generally PSU banks like State bank, Canara bank, Bank of Baroda and others fix Rs 1000/- as minimum balance with cheque facility and for non cheque facility Rs 500/- . Private banks like Axis bank, ICICI bank, HDFC bank has fixed Rs 5000/- to Rs 10000/-as their minimum balance requirement. Banks also open Salary accounts for staff members of corporates in tie up with the companies with zero minimum balance.

In case of Current accounts, minimum balance requirement is relatively more than that of what is required for Savings account and that too varies from bank to bank. Presently it is about Rs 5000/- to Rs 10000/-.

Fixed Deposits (FD) and Recurring Deposits (RD)

Fixed deposits and Recurring deposits are accounts provided by the banks mainly for the purpose of investment to public for a return by way of interest. Differences between the two is briefed below:

Fixed Deposit:

FD (Fixed Deposit) means investing a lump-sum amount for a specific time period. Interest rate depends on the maturity period, longer the period greater the interest rate. You can opt for periodical returns like monthly/quarterly/half yearly or annually, or simply opt to get the investment amount with accumulated interest at the end of the period.
Premature and partial withdrawal facilities are available in Fixed Deposits, but with some penalty which is to be paid at the time of withdrawal. This penalty amount varies from bank to bank. TDS (Tax Deductible at Source) will be applicable to the interest amount ie. If the interest paid on deposit exceeds Rs.10000/- per year. This is fixed by the government which is at present 10% of interest amount plus 3% Education Cess.

Recurring Deposit:

If you don't have a lump-sum amount and wants to invest a certain fixed amount for a specific time interval, then Recurring Deposit is a better option. Make sure that you will be able to pay that fixed amount every month. One of the major drawbacks with Recurring Deposits is that it is not flexible. Partial payment is not possible nor can pay more than the monthly fixed amount. In RD also interest rate depends upon the maturity period, longer the period greater the interest rate. Fixed Deposit normally gives more returns than Recurring Deposit. Premature withdrawal is possible but with penalty at the time of withdrawal and the penalty varies from bank to bank. Partial withdrawal is not possible in Recurring Deposits. TDS is not applicable in Recurring Deposits.



Author: JyotiS    07 Nov 2012      Member Level: Gold     Points : 6  (Rs 5)    Voting Score: 0

I am sure Paresh Gujaratiji, your query about each and every type of accounts is cleared now with such a detailed explanation by our experts. In simple and limited words, I would like to summarize it as follows:

Banks in India basically favors 4 types of Deposit accounts:

1.Savings Bank account: As the name suggests, it is the type of account where a part of our savings is deposited and interest rates are calculated on the deposited amount. It can be an individual account of couple account. Interest rates vary from bank to bank.

2.Current Bank account: This is the banking solution for business class people who does large transactions daily. These accounts are created neither for earning interest nor for the purpose of saving. Number of transactions is not limited in such type of accounts. Further, some minimum amount has to be maintained in Current accounts.

3.Recurring deposit account: As the name suggest, in this account, we need to deposit a fixed amount on monthly basis for a fixed period of time for a fixed interest rate. Suppose, my saving per month is Rs. 1000 then instead of depositing it in savings account, I should deposit this amount "each month" in Fixed Deposit account to get higher interest rates.

4.fixed deposit account: In this type of account, we can deposit a fixed amount for a fixed period of time for a fixed interest rate. We cannot claim the money before the pre-decided time period else we will not get the appropriate interest on this amount.

Every bank gives different interest rates on different type of accounts (except on Current bank account where no interest is paid) which is liable to be changed depending on the Bank changed rules and policies. To get the detailed info, you need to check the desire Banks website.

With the increasing demands and requirements, Banks are now offering different new type of Banking Accounts to attract users of different streams and interests. Such accounts include Demat accounts, Insurance Accounts, Pension Accounts, retirement account, Paypal account etc.


Author: Muhammedaneez    07 Nov 2012      Member Level: Gold     Points : 8  (Rs 6)    Voting Score: 0

Savings account and current account are two different types of bank account which is provided by each bank. Most of the people know the names of these two different bank accounts but they dont know what is the difference between them. Saving account is an account which is mostly used by students and other common people. The key feature of this account is that the account not need a minimum balance. You will get the atm card of visa/master card, checkbook etc. But the problem is that the number of transactions allowed this account holders are limited. In case of current account the account need a minimum balance. It means a current account holder have to maintain a minimum balance of Rs.1000 or as per the policys of each bank and if the balance is below than this for a period all the amount will be deducted from your account. But in some banks current account holders will get more interest than savings account holders. And for starting a current account you need a pan card which is issued by tax department of india. If you dont have a pan card the bank will give a form for applying for this and when the goverment issued your pan card the bank will add the details of your account with pan card for the tax purposes. Recurring account is an account which is only allot for employs and the salary of them will transfer to this account at a specific date. The interest rate of recurring account is more when compare to savings and current accounts. Fixed deposit account means the amount which is deposited by the account holders will be for a fixed time. These types of accounts will get more interest than other accounts and we can withdraw the money only after the period at any instance.

Author: Anand    07 Nov 2012      Member Level: Gold     Points : 12  (Rs 10)    Voting Score: 0

Dear Friend:

I have explained the meaning of Saving Account as well as Current account and its silent features.

The main differences between these two accounts is outlined below in terms of their respective objectives and merits of each other accounts.

a) Saving Account:

The real meaning of this can be seen on the account mentioned. It is called saving of hard-earned money by an individual with a intention to save part of his income for future purpose and also to earn some interest on the deposited amount.

It is opened in bank by salaried person for have fixed income on a monthly basis. This account can be opened either by a student, senior or a retired person or a pensioner.

The purpose of opening this account is to save money and collect their savings. The minimum amount to open an saving account varies from bank to bank. Example : Rs 500 to Rs 5,000.

Main objectives of Saving account:

a) No maximum period for maintaining saving account. Saving account are continues in nature;

b) The holder of this account enjoys full rights to withdraw funds as and when he requires them, during the official working timings of the bank.

c) Interest shall be given to the account holder on the saving balance at end of month and the rates varies from bank to bank, which is approx to 4% to 6%.

d) The holder of account can withdraw the money through withdrawal slip provided by the bank in the counter itself.

e) Withdrawals are limited in a month as per guideline by each banks.

f) To operate this account, NIL balance is not acceptable by the bank, hence at least a minimum of Rs 500 and above is recommended to keep the account active.

Main Merits of maintaining Saving account:

a) The debit card issued by the bank to the account holder of saving account helps to do online shopping very easily

b) Bank provide statement during each month, and this helps the salaried personnel to keep a track on each items he spent and earned. It means he get a thorough report of all debits and credits earned / spent during the month.

c)It provides immediate assistance to cash, as it provide ATM card to the account holder.


Current account:

It is an account opened for business transactions. In this type of account, frequent transactions are made on a day to day business hours.

Current account are those accounts operated and opened by businessmen, multi-national companies, firms, who will maintain bulk transactions with the banks on a daily basis consisting of both deposits and withdrawals.

The purpose of opening this account is that frequent business activities can be done regarding deposit and withdrawals at any time without any written advice to the bank. These accounts are very useful to make payments to suppliers by using cheques.

Furthermore, money received from the esteemed customer can be onward deposited into this account on a daily basis.

The minimum amount to open an current account varies from bank to bank. Example : Rs 5,000 to Rs 10,000.
In this current account, bank charges a minimum amount of Rs 50 on each transactions, for service rendered to customers and usually no interest is paid on current account.

Current account holder get benefits of overdraft service provided by the bank.

Main objectives of Current account:

a)No fixed period for maintaining current account. It is continues in nature;

b)No Interest paid on current account. But as per prevailing market conditions, many major banks do pay interest also on current account.

c) Deposits and Withdrawals can be made without any limit specified by the banks.

d) To operate this account, NIL balance is not acceptable by the bank, hence at least a minimum of Rs 5,000 and above is recommended to keep the account active.


Main Merits of maintaining Current account:

a)This account primary focuses on ensuring businessmen, firms and companies to run their business dealings smoothly.

b)Overdraft Services provided by the bank to current account holder.

c)Direct payment can be done to supplier with help of cheque book provided by banks.

d)By opening Current account, it helps others to know the business credibility of your firm, organisation.

e)By opening current account many businessmen, firms, and companies will be secured of maintaining their huge accounts in a safe location.


Difference between Fixed Deposits account and Recurring Deposit Accounts:

Fixed Deposits Account:

This type of account can be opened by an individual, corporate companies, firms, businessmen, multinational companies.

Under this type of account, funds are deposited for a short, medium and long term i.e six months, one year, or five to ten years. The rate of fixed deposits rates varies from bank to bank, which is approx to 9% to 9.5%. The fixed deposit account holder has rights to opt for interest on monthly, quarterly, half yearly, or yearly basis.

The Fixed Deposit Account Holder earn more interest if he surrender or keep the FD in bank for a period of more than one to five years, meaning longer the term, greater the interest earned.

Under this account, the money deposited cannot be withdrawn before the expiry of the fixed term of period / maturity period which is specified on the fixed deposit receipt.

In case of emergency, bank allows to pre-settle the fixed deposit account prior to maturity date by deducting 1% from the interest payable as on that date.

Main objectives of Fixed Deposit Account:

a) Higher rate of interest can be earned by an individual, corporate companies, firms, businessmen, multinational companies on their surplus money.

b) Term of deposit varies from 6 months to 10 years.

c) A fixed deposit can be renewed further for a period of 6 months to one year, five or ten years.

Main Merits of Fixed Deposit Account:

a) On a Fixed Deposit account, the holder enjoys the saving made with high rate of interest paid by bank during the maturity

b) The depositor can also apply for loan facility surrendering the fixed deposit amount which is already in bank.


Recurring Deposit Account:

The real meaning of this can be seen on the account mentioned. It is an account where some amount of saving of hard-earned money is deposited in the bank on a daily basis. These savings are made for a specify purpose at a future date.

Examples: Wedding cost, purchase of land, car, house-hold things etc.

These deposits are opened by regular income individual who want to save on a timely basis for a certain period of time and earn a higher interest for the fund deposited in the bank. A certain fixed amount is deposited every month for a period and total amount is paid to the depositor along with the interest.

The rate of interest is slightly higher than the savings account. These recurring deposits has a fixed maturity period which is similar to FD account.
In this deposit account, the individual need to be sure of paying the fixed amount every month to the bank. Bank will never allow any partial payment or more amount in this account.

Main objectives of Recurring Deposit Account:

a) The main object of recurring deposit is to improve savings amongst the individual.

b) Minimum amount that can be deposited is Rs 20 at a timely intervals.

c)The rate of interest is slightly higher than savings account

d) Term of deposit is minimum from 6 months to maximum 10 years.

Main Merits of Recurring Deposit Account:

a) Loan facility can be provided by the bank upto certain percentage of the amount of the account holder.


Author: Manoj Chaurasia    08 Nov 2012      Member Level: Gold     Points : 5  (Rs 3)    Voting Score: 0

@Chandan
Minimum recurring deposit period starts from 6 months and can extend upto 120 months. It is totally at your discretion.

If every month you have surplus balance of Rs.5000 after meeting all your expenses in your savings account then you can opt for recurring deposit of the same amount.
If you are sure that you are going to stay in your job and not planning any change where you will have to forego your regular income then you can easily opt for recurring deposits.

You can even go for smaller amounts and save the balance for any contingency.

With regard to maturity amount, each bank have their own calculator to compute the same and for your reference i am giving you the link of HDFC bank in reference url, which you can use to calculate the maturity amount as per the sum and period selected by you.
You can search for your bank accordingly.

Regards


Reference: http://www.hdfcbank.com/RD_Calculator/rdcalculator.aspx

Author: keerthivasan    09 Nov 2012      Member Level: Silver     Points : 6  (Rs 4)    Voting Score: 0

Current Account:
The account is for business man and business concerns. The person who deposits his money in this account does not get any interest in return but he has right of depositing and withdrawing any amount from the accounts at 24 hours without limit. Liquidity is so quick in current account. Money is flowing highly in this account therefore it is named as current account.
No rate of interest is provided to this type of account because it is highly liquidity.
Savings Account:
The account is for general public. The liquidity is restricted as per terms of the bank for SB Accounts. Some minimum balance is to be kept always in this account then only bank keeps the account as active otherwise the account will become inactive and closed.
Some rate of interest is fixed for this type of accounts. They are paid yearly once for the account holder.
Fixed Deposit:
Some amount of deposit is paid in this account but they are not allowable to withdraw for some period of times. The bulk amount is paid once in this account and they are kept for some periods without withdrawing in the banks.
High rate of interest is provided for this type of accounts because they are remained unwithdrawn for some period of time in banks.
Recurring deposit:
It is slightly differed from fixed deposit. In FD, bulk amount is paid once in account but in RD, amount is paid in equal installments and they are not withdrawn for some period of time.
Like Fixed Deposit, RD is also having high rate of interest.


Author: Venkiteswaran.    09 Nov 2012      Member Level: Diamond     Points : 8  (Rs 6)    Voting Score: 0

Let me answer your question in a simpler manner:

Savings Account- as the name goes is basically for purpose of saving one's extra money. The aim of Savings Account is to keep one's small amounts in safely and at the same time keeping it convenient to use it in part when need comes. Hence Savings bank account has the facilities of remitting money and taking out money in small amounts and with limited numbers of transactions.It earns interest in a small way based on the amounts lying on each day.

Any individual or group of persons like associations not engaged in profitable business activities are eligible to open a savings account. Even minors ( with conditions) can have savings account. There can be joint accounts with one or more individuals.
The interest rate is meager in comparison with long term deposits.

Current Account- as the name signifies is current- flowing in and out. Current Account facilitates many transactions of putting in money and taking out money in same day. So it is suitable to business activities where there needs lot of payments and lot of receipts.

Individuals, business organisations, corporates all can have current account.
As the current account is not aimed in saving, interest is not paid. However as there are many facilities like using huge number of cheque books, getting periodical statements and certificates etc, banks may charge current accounts.

Recurring Deposit and Fixed Deposit

Both recurring deposits and Fixed deposits are long term savings accounts. But while in Fixed Deposit(FD) the deposit is only once at start and is thus 'fixed; in Recurring Deposit(RD) amount is recurringly deposited every month till the maturity period.

Recurring Accounts- Recurring accounts are a kind of long term deposits where a fixed amount is deposited into the account which will accumulate along with interest and mature on a specified date decided at the time of opening. This account is suitable for people who have a regular fixed monthly income like salary earners, who can save a fixed sum for provision for getting a large sum after some long period. All persons / entities eligible to savings account can open recurring account. The withdrawal is allowed only once when the account matures or prematurely closed. The interest rate is similar to the other fixed deposits of same period.

Fixed Deposit
In fixed deposit, there are various provisions to get interest periodically, or reinvest same and get accumulated at the maturity.The interest rates are more than savings accounts. Fixed deposits come in aid of people who are retired and need regular income (from interest) without diminishing their core deposit.

(There are many variations) to individual products in above accounts but the above are the basic features.



Author: K SELVAKUMARAN    12 Nov 2012      Member Level: Silver     Points : 2  (Rs 2)    Voting Score: 0

Dear,

Current accounts are opened for Business use whereas savings accounts are opened for personal use only.

Both Current and Savings account holders can have ATM and cheque book facilities.

Nowadays Savings accounts get interest rates according to the bank where you have your account.

Account name of Savings account will be your name (Ex: Tony John) But in Current account it will be your company name (Ex: ISC Technologies ltd.,)


Author: anily    03 Dec 2012      Member Level: Silver     Points : 3    Voting Score: 0

Current Account- as the name signifies is current- flowing in and out. Current Account facilitates many transactions of putting in money and taking out money in same day. So it is suitable to business activities where there needs lot of payments and lot of receipts.
The person who deposits his money in this account does not get any interest in return but he has right of depositing and withdrawing any amount from the accounts at 24 hours without limit. Liquidity is so quick in current account. Money is flowing highly in this account therefore it is named as current account.
No rate of interest is provided to this type of account because it is highly liquidity.


The aim of Savings Account is to keep one's small amounts in safely and at the same time keeping it convenient to use it in part when need comes. Hence Savings bank account has the facilities of remitting money and taking out money in small amounts and with limited numbers of transactions.It earns interest in a small way based on the amounts lying on each day.
Some minimum balance is to be kept always in this account then only bank keeps the account as active otherwise the account will become inactive and closed.
Some rate of interest is fixed for this type of accounts. They are paid yearly once for the account holder.





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