Posting Point
In most cases, creating a bank account is the first step in one’s financial path. However, different people have various goals: some may simply want to keep their money secure while earning a small amount of interest, while others may want to use the account to fuel business growth by making regular transactions and payments. Thus, in the retail and private banking arena, there are two extremely prevalent types of accounts — current and savings accounts – to fulfill both of their needs.
What is a savings account?
A savings account is a financial product that allows you to save money. A savings account allows you to deposit money and withdraw it whenever you need it. Each time you make a deposit into a savings account, it increases your savings. Additionally, the money in your savings account can earn you interest. The features of a savings account are,
Savings accounts have no limits on how much money can be deposited or withdrawn; nevertheless, it is required to keep a minimum balance in the account; otherwise, a penalty will be incurred by subtracting a set amount from the account. Most banks require users to maintain a minimum amount in order to manage their accounts.
- A savings account can be operated for as long as the account holder desires, implying that there is no time limit on how long the account can be managed.
- On the amount deposited, banks pay the account holder a fixed savings account interest rate.
- With a savings account, you won’t be able to get an overdraft.
- For frequent transactions, whether online, offline or at ATMs, customers receive debit cards and online banking services.
- On a daily/monthly basis, the number of transactions allowed is limited.
- Any Indian resident can open a savings account; however, in the case of children and minors, the account must be opened and maintained by their parents or guardians.
- A savings account encourages people to save money.
Here are the different types of savings accounts offered by a large number of banks,
- Regular savings account
- Salary savings account
- Zero balance savings account
- Children and minor savings account
- Women’s savings account
- Senior citizen savings account
What is a current account?
Traders, business people, and entrepreneurs who manage their own companies, firms, trusts, and so on utilize a current account for regular financial transactions.
Paper checks were once the most prevalent method of making payments from a current account, which is why it is also known as a checking account. This account often allows for limitless transactions but does not earn interest. It gives you the freedom to take out more money than you have in your account. However, to use all of the account’s features, you must have a large minimum balance. The features of the current account are,
- Although this type of account does not pay interest on deposits, some banks have recently begun to do so.
- With a current account, you can get an overdraft.
- The minimum balance requirement for these accounts is greater. If it is not kept up to date, a penalty is enforced, with money deducted from the user’s bank account.
- Current accounts are of a continual nature, which means they do not have a set period of time during which they must be used.
- Opening a current account necessitates the submission of KYC papers.
- The amount that can be deposited or withdrawn has no restriction; nevertheless, the account holder must have enough funds in his or her account to accomplish the operations.
Whatever account you choose, make sure you thoroughly examine your needs and then keep all of your KYC documents, pictures, and the initial account opening amount ready.
