Savings account vs current account: which do you need?

What each one is for

A savings account is meant for individuals to keep and grow personal money. It pays interest, and it is designed for a moderate number of transactions.

A current account is meant for businesses, professionals and traders who make many payments and receipts each day. It usually pays no interest, but it is built to handle high transaction volumes and business features.

How they differ

• Interest: savings accounts pay interest; current accounts generally do not.
• Transaction limits: savings accounts often cap the number of free transactions or cash deposits in a month; current accounts allow far more, though very high volumes can attract charges.
• Balance requirements: current accounts commonly require a higher average balance, with a penalty if you fall short. Savings accounts range from zero-balance to premium accounts that ask for a larger balance.
• Business features: current accounts often come with overdraft facilities, easy multi-location banking, and tools for payments and reconciliation.
• Who can open them: savings accounts are for individuals; current accounts are for businesses and certain professionals, and banks may ask for business proof such as registration documents.

Which one you need

If you are an employee or keeping personal savings, a savings account is the right choice. If you run a business, are a professional with regular client payments, or handle a high volume of transactions, a current account is usually expected, and banks generally want business activity to run through it.

Freelancers and very small businesses sometimes start on a savings account and move to a current account as the volume grows. Practices differ by bank, and mixing personal and business money makes accounting and taxes harder, so a separate business account is cleaner as soon as it is practical.

What to compare when choosing a current account

• The average monthly balance required, and the penalty for missing it.
• How many transactions and cash deposits are free, and the charge beyond that.
• Fees for NEFT, RTGS, UPI, cheque books and cash handling.
• Whether an overdraft or other credit facility is available as your business grows.
• The quality of online and mobile banking, since you will rely on it daily.

Compare before you open

Banks change their charges often, so check the current schedule of fees before you decide. The savings and current account lists on Truely Money let you compare accounts side by side. This is general information, not personal financial advice.