Transcription
Hello friends, I am Shubh and I welcome you to my channel Key Differences. Today, in this video, we will be discussing the difference between a savings account and a current account. So friends, let's get started.
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Savings account, as the name itself gives a brief description, it is a deposit account used by individuals, clubs, associations, and other bodies such as trusts, societies, etc., to park their money for future use. This is an interest-bearing account on which the bank pays interest to the account holder so as to encourage the habit of savings in people. The best thing about a savings account is that the money is safe and accessible anytime and anywhere through a 24-hour ATM facility.
Features of savings account:
The account holder is permitted to withdraw money on demand on presentation of a cheque or through a withdrawal form. Next, there are certain restrictions on the number of withdrawals per month and the amount withdrawn per day. The account holder has to maintain a minimum balance in his account, otherwise, a fee or penalty is charged by the bank. It is an interest-bearing account on which the bank pays interest on a daily basis on the outstanding balance of the account. Lastly, banks provide a passbook or statement of account to the account holder that acts as a snapshot of the date-wise debit and credit details of the transactions and the credit balances at the end of the customer's account.
Current account:
Current account is an active account which remains operational all day long, meaning that there is no limit on the number of transactions during a working day. In fact, there is no limit on the amount of withdrawals per transaction. In other words, the account supports frequent transactions and so it is mainly used by firms, institutions, government bodies, and societies.
Features of current account:
A current account is a non-interest-bearing account, meaning that no interest is paid by the bank to the current account holders for the amount deposited in the bank. Overdraft facility: banks allow overdraft facility to the account holders either for a short period or on a regular basis, but to a certain limit. Statement of account is provided by the bank to the account holder on a periodical basis. To maintain a current account, banks often levy some charges known as ledger folio charges. However, some banks do not charge any amount for the maintenance of a current account, subject to the balance maintained in the account is enough to compensate the work involved in it. Lastly, banks also provide cheques or bills collection facility to the account holder.
Difference between savings account and current account:
Meaning: Savings account is a deposit account used by the customers to save their money for future use. On the other hand, current account is a bank account which allows its customers to perform frequent transactions, meaning that it can be operated upon any number of times during a day.
Purpose: The primary aim of a savings account is to encourage the habit of savings in people, whereas a current account aims at supporting frequent transactions.
Interest: While banks pay interest on the savings account on the outstanding balance in the account, no interest is paid on the current account.
Withdrawals: The number and amount of withdrawals is limited in a savings account. Conversely, there is no limit on the number and amount of withdrawals in a current account.
Minimum Balance: The minimum balance to be maintained in a savings account is comparatively less than a current account.
Account Details: For savings account, banks provide a passbook or statement of accounts, whereas for current account, only statement of accounts is provided by the bank.
Overdraft Facility: Overdraft facility is provided for current account only.
Opening Balance: When it comes to opening balance, the opening balance required for a savings account is comparatively less than a current account.
Suitability: Lastly, when it comes to suitability, a savings account is best for individuals and households. A current account is best for businessmen and companies.
Okay guys, this is all for this video. Now, if you want to study the topic further in detail, you can visit our official website, datakeydifferences.com. Here you can find a detailed comparison of the savings account and current account along with their definitions and similarities. So friends, I hope you enjoyed watching this video. Please like and share this video, and if you have any queries or feedback for me, don't hesitate to comment below. And guys, do subscribe to our channel and press the bell icon to never miss an update from Key Differences.