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Every time when we withdraw cash from bank account using ATM, the ATM machine asks whether you want to withdraw money from your saving account or current account. I used to get confused because I did not know that what is the difference between these two accounts? It was because at the time of getting my account opened, I was not aware of these two terms so I didn’t tick on any of the options under head ‘type of account’. Later at a stage I joined a bank (not at all for the purpose of knowing these differences) then I came to know that these two accounts are totally different.
So what is the difference between saving account and current account?
Saving account:
Saving accounts are used mainly by individuals who want to deposit their small savings in bank account. These bank accounts are suitable for salaried employees, students and individuals who don’t have to perform banking transactions in bulk.
On saving account, a fixed rate of interest is given by the banks to increase the saving habits of individuals (ultimately their profits).
There are restrictions on no. of transactions, carried out through a saving account. Other restrictions are also applied on saving accounts like limit for withdrawal of money, depositing cash or cheque at another branch and so on.
Current account:
Current accounts are suitable for business professionals, proprietorship firms, partnership firm, private limited companies, public limited companies, societies, trusts, associations etc. It is because these firms have to carry out a large no. of banking transaction every day. These accounts enable such individuals and organisations to carry out these banking transactions without any restrictions.
One of the main drawbacks of current accounts is that the account holders are not entitled for any interest on money deposited in their bank accounts.
These bank accounts allow a customer to perform as many banking transactions as they want. Some restrictions are applied on normal or regular accounts.
These bank accounts also enable an account holder to withdraw money with no limitation from his bank account although restrictions are applied on money withdrawal from ATM and other than home branches.
These accounts provide the facility of depositing money at any of the bank branches by cheque or in cash (although restrictions are applied for normal or regular current account holders).