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It is easy to question why a business needs a current account when savings accounts appear to do the job just as well. But there are significant differences between current account and savings accounts that business founders must be cognizant of.
The objectives of opening a bank account vary from person to person – some may seek safe storage of money coupled with a bit of interest income along with investment benefits. While others would intend to use the account to fuel business growth with frequent transactions/payments accompanied by other services like loans, credit, and much more.
Thus, to serve both their interests, there are two common types of accounts in the retail and private banking space – Current and Savings accounts.
This blog post will discuss the key differences between a Current account and a Savings account to help you decide which account type is right for your financial aspirations.
What is a Current Account?
A current account is primarily designed to facilitate frequent/regular financial transactions by traders, business people, and entrepreneurs running their companies, firms, trusts, etc.
A Current Account usually offers unlimited transactions but doesn’t provide any interest earnings. It allows flexibility to withdraw more than the actual account balance. But, there is a high minimum balance requirement to avail all the account benefits.
Read More: Benefits of Current Account for Business
What is a Savings Account?
As the name suggests, a savings account is designed to encourage and promote savings. The holder can deposit money conveniently, on which the holder can earn interest. It can be opened by an individual or jointly who intend to build wealth for their short-term and long-term financial goals.
Typically, a savings account offers interest income, and the minimum balance to be maintained is also slightly on the lower side with the facility to issue cheques.. However, the account holders are allowed a limited number of transactions.
Read More: FAQs on Basic Savings Deposit Account
Differences between Current Account and Savings Account
Now that you understand the basics of a current and savings account, the key differences are between the two are as follows:
| Current Account | Savings Account | |
| Purpose | To facilitate frequent business and trade transactions. | To save and accumulate wealth for future goals. |
| Suitability | It is mainly designed for organizations , business owners, companies, firms, etc. | It is appropriate for salaried people with regular income and short term financial goals |
| Interest Rate | Most Current Accounts do not provide any interest earning. | Offers interest-earning linked to a benchmark, such as a bank rate.(mostly 4%-6%) |
| Transaction Limit | There are no restrictions on the maximum number of transactions. | Limited number of transactions are offered. |
| Balance Maintenance | The minimum balance to be maintained is higher than the Savings Account. | The minimum balance to be maintained is low. |
| Overdrawing facility | The account holders are allowed to overdraw for the short-term. | There is no overdraft facility available for Savings Account holders. |
What’s next?
Lately, the collaboration of banks with the fintech domain is stealing the spotlight. Neobanks have been the talk of the town as they are a beautiful product of this collaboration. They leverage their modern digital platform to analyze customer data and make data-driven decisions.
Long, tedious processes involving payments and disbursals can weigh on businesses often but with Neo-banking platforms, money movement and business insights, financial operations can get much simpler.
Today, Tech-savvy neo banks swear by the host of services they offer, some of them being – multi-access collaboration, end-to-end automation, real-time notifications and transparency.
Choose the best current account for your business:
RazorpayX-powered Current Account currently hosts 90% of India’s leading tech start-ups.
RazorpayX was born out of the need to deliver the best financial management experience for merchants. It reimagines how businesses manage money flows and simplifies banking for Founders, CXOs Chartered Accountants and finance professionals.
RazorpayX is a full-stack banking suite that supercharges the current accounts
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FAQs
What is Current Account?
A current account is primarily designed to facilitate frequent/regular financial transactions by traders, business people, and entrepreneurs running their companies, firms, trusts, etc. A Current Account usually offers unlimited transactions but doesn’t provide any interest earnings.
What is Savings Account?
As the name suggests, a savings account is designed to encourage and promote savings. The holder can deposit money conveniently, on which the holder can earn interest. It can be opened by an individual or jointly who intend to build wealth for their short-term and long-term financial goals.
What is RazorpayX powered Current Account?
RazorpayX was born out of the need to deliver the best business banking experience for merchants. It reimagines how businesses manage money flows and simplifies banking for Founders, CXOs Chartered Accountants and finance professionals. RazorpayX is a full-stack banking suite which supercharges current accounts.
