Switching your direct deposit to Current You can have your employer send your paycheck directly to your Current account whenever you normally get paid. If you have a Premium account you'll also receive the funds when we get them, instead of when your employer suggests, up to 2 days faster than normal. You can learn how to set this up in-app here. A current account, also known as financial account is a type of deposit account maintained by individuals who carry out significantly higher number of transactions with banks on a regular basis. It is created by the bank on request of the applicant and is made available for frequent or immediate access. Certificates of deposit are time deposit accounts that operate on a deadline. Each CD has a term, ranging between three months and 60 months. The CD earns interest from the moment it’s funded until the term comes to an end, which is known as the CD’s maturity date.

Before going to open an account in a bank, one should be clear in mind, as to which type of account is best suits their requirement. If a person wants to open an account to keep his/her savings to fulfill their future needs and desires to earn income from such savings then nothing is better than a saving bank account. However, if an individual or entity, wishes to open an account that can be operated end number of times, during a working day, then current account or checking account is best.

While savings account is mainly preferred by the clubs, associations, individuals, trusts etc. current account is meant for individuals, business entities, government bodies, societies, trusts, institutions, etc.

Deposits of banks are broadly classified into three categories: Demand deposit, Term deposits and Flexi deposit or also known as Hybrid deposit. Demand Deposits Account Demand deposits are repayable on demand by the customers. Current account deposits, Savings bank deposits and Call deposits are the examples of demand deposits. These deposits are repayable on demand by the customers. Current bank account is opened by businessmen who have a higher number of regular transactions with the bank. It includes deposits, withdrawals, and contra transactions. It is also known as Demand Deposit Account. Current account can be opened in co-operative bank and commercial bank.

To further comprehend this, read out the article to get full fledged knowledge on the difference between savings account and current account.

Content: Current Account (Checking Account) Vs Saving Account

Comparison Chart

Definition of Saving Account

Savings Account is the most common type of deposit account. An account held with a commercial bank, for encouraging savings and investments is known as a Saving Bank Account. A savings account provides an array of facilities like ATM cum Debit Card facility with different variants, calculation of interest on a daily basis, internet banking, mobile banking, online money transfer, etc.

The account can be opened by any Individual, Agencies or institutions (if they are registered under the Societies Registration Act, 1860). A Pvt. Ltd and a Ltd. company are not allowed to open a savings account.

Definition of Current Account

A deposit account maintained with any commercial bank, for supporting frequent money transactions is known as Current Account. A plethora of facilities is provided to you, when you opt for a current account like payment on standing instructions, transfers, overdraft facility, direct debits, no limit on the number of withdrawals/deposits, Internet Banking, etc.

This type of account fulfils the very need of an organisation that requires frequent money transfers in its day-to-day activity.

An Individual could open this type of account, Hindu Undivided Family (HUF), Firm, Company, etc. Account maintenance charges are applicable as per the bank rules. The current account is also known as checking account or a transactional account.

Key Differences Between Savings Account and Current (Checking) Account

The difference between savings account and current (checking) account can be drawn clearly on the following grounds:

Deposit Account Vs Checking Account

1. Savings account refers to an account that is meant for people who keep their saving to fulfil their financial requirements in future. Current (Checking) account is an active account which is meant for day to day monetary transactions.
2. Savings account aims at encouraging savings of the general public whereas current account supports frequent and regular transactions of the account holder.
3. Saving Account is appropriate for salaried people and the group of people like the club, trust, an association of persons, etc. for regular savings. Conversely, Current Account is perfect for business entities, government departments, societies, institutions, etc. because they have to deal with daily money transactions
4. There is a restriction on the number of daily and monthly transactions, in the case of a savings account, i.e. if the transaction limit exceeds the specified limit charges may apply. There is no such cap for a Current Account, in essence, there is no restriction on the number and amount of transaction.
5. The current account is non-interest bearing, but a saving bank account earns interest, which is normally 4-8%.
6. Passbook is provided by banks on the savings bank account which lists the number of debits and credits to.from the account datewise. On the account, no passbook is issued by the bank to the current account holders.
7. Bank overdraft facility is provided to the current account only and not n the savings account.
8. The opening balance required to start a savings account is very less. In contrast, current account requires high amount as the opening balance, to start the account.

Video: Savings Vs Current Account

Similarities

• Type of Demand Deposit
• Internet Banking Facility
• Multicity Cheque Facility
• Nomination facility

Conclusion

We have discussed in detail about both the entities, and it is quite clear that the two are important in place. If we talk about the major difference between them, it is the number of transactions – withdrawal or deposit.

Current Deposit Account

Current bank account is opened by businessmen who have a higher number of regular transactions with the bank. It includes deposits, withdrawals, and contra transactions. It is also known as Demand Deposit Account.

Current account can be opened in co-operative bank and commercial bank. In current account, amount can be deposited and withdrawn at any time without giving any notice. It is also suitable for making payments to creditors by using cheques. Cheques received from customers can be deposited in this account for collection.

In India, current account can be opened by depositing Rs.5000 to Rs. 25,000. The customers are allowed to withdraw the amount with cheques, and they usually do not get any interest. Generally, current account holders do not get any interest on their balance lying in current account with the bank.

Current account holder get one important advantage of overdraft facility.

Features of Current Bank Account

The main features of current account are as follows:-

• Current bank accounts are operated to run a business.
• It is a non-interest bearing bank account.
• It needs a higher minimum balance to be maintained as compared to the savings account.
• Penalty is charged if minimum balance is not maintained in the current account.
• It charges interest on the short-term funds borrowed from the bank.
• It is of a continuing nature as there is no fixed period to hold a current account.
• It does not promote saving habits with its account holders.
• Banker requires KYC (Know your Customers) norms to be completed before opening a current account.
• The main objective of current bank account is to enable the businessmen to conduct their business transactions smoothly.
• There is no restriction on the number and amount of deposits.
• There is also no restriction on the number and amount of withdrawals made, as long as the current account holder has funds in his bank account.
• Generally, bank does not pay any interest on current account. Nowadays, some banks do pay interest on current accounts.

Advantage of Current Bank Account

Current Account Deposit Definition

The advantages of current account are as follows:-

Current Deposit Accounts

• Current account is mainly opened for businessmen such as proprietors, partnership firms, public and private companies, trust, association of persons, etc. that has a large number of daily banking transactions, i.e. receipts and/or payments.
• It enables businessmen to carry out their business transactions properly and promptly.
• The businessmen can withdraw from their current accounts without any limit, subject to banking cash transaction tax, if any levied by the government.
• Home branch is that location where one opens his bank account. There are no restrictions on deposits made in the current account opened in a home branch of a bank. However, the current account holder can deposit the cash from any other branch of a bank other than the home branch by paying a nominal charge as applicable.
• It helps businessmen to make a direct payment to their creditors by issuing cheques, demand-drafts or pay-orders, etc.
• It enables a bank to collect money on behalf of its customers and credits the same in their customers' current accounts.
• It enables the current account holder to obtain overdraft (short-term borrowing) facility.
• The creditors of the account holder can get credit-worthiness information of the account holder through inter-bank connection.
• It facilitates the industrial progress of the country. Without its help, businessmen would face difficulties in running their businesses.
• It has the facilities of Internet-banking and mobile-banking to carry out important business transactions with ease and quickly.
• It also provides various other advantages (benefits) such as:
• Deposit and withdrawal of money (cash) at any location.
• Multi-location funds transfer,
• Electronic funds transfer,
• Periodical (monthly, quarterly or yearly) e-mail or download of bank statements in various formats like '.XLS', '.TXT', '.PDF', etc.
• Support from customer care executives

Current Account Deposit Account

Source:Portal Content Team