Banking might be a confusing task for you but is not that difficult. For most of us the first introduction to banking system is through a savings bank account and then various other banking products come into our knowledge with due course of time.
It is possible for an average individual to confuse between savings and current accounts, here we will aim to clear those confusions and doubts.
What is a Saving Account?
A saving account is the most common type of bank account, where you get interest on balance maintained in the account. A single person can have two or more savings accounts also but with different banks only. Two or more individuals can have joint account also, which is another form of a savings account.
The features of a savings account that you should know are as given below:
The savings account is preferable for those individuals who have a fixed salary. Furthermore, the bank offers interest on average balance maintained in the account at a fixed interest rate, which is credited to the account periodically.
What is a Current account?
A current account is usually preferable for a business or an organization. The current account has many benefits and offers ease of operation to an organization.
The features of a current account are as follows:
A current account offers many benefits, and all these benefits help in running of business smoothly and easily. However, it must be noted that current accounts are most suitable for business entities only as they offer no interest on money deposited.
The Difference between the two accounts
Here is a short differentiation between the two kinds of accounts which will help you to decide, what type of account would be better for you.
Which one is better?
That said, the question of choice of the accounts arises. Which account should you choose? And what parameters for your choice should you consider?
To be honest, the choice will depend on the nature of your use. The accounts you hold or choose to hold will also depend on the nature of your work. While current accounts offer a vast array of benefits, those benefits hardly matter to a person with a fixed income.
An individual with fixed income will want to save money and earn some interest over it, and a savings account will offer him that feature. However, for an enterprise, a business requires initiating multiple transactions in a day. And there is no limit on the amount of money that may be needed for the day to day requirements.
And it is because of these reasons; a current account is the best option for a business. Furthermore, a company may be run by a proprietor or have multiple partners who need to follow through various transactions. A current account can have multiple signatories, thereby helping the business to run smoothly.