Index Fund Corner
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|---|---|---|---|---|
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Understanding the difference between savings and current accounts
Savings accounts and current accounts differ in their purposes and usage. Your choice depends entirely on your banking needs.
According to HDFC Bank, “A savings account is a deposit account that allows limited transactions, while a current account is meant for daily transactions.”
In simpler terms, a savings account is ideal for individuals looking to save money over a longer period, while a current account is more suited for frequent, day-to-day transactions.
Savings account: Features and benefits
Interest on deposits: A savings account allows individuals to earn a fixed interest on the money deposited. This feature proves beneficial for meeting future needs and tackling financial emergencies.
Lower minimum balance: The minimum balance requirement for a savings account is typically lower compared to other account types, making it accessible for most individuals.
Current account: Features and benefits
Unlimited transactions: Current accounts are designed for quick and frequent transactions. They allow unlimited deposits and withdrawals, catering to business needs.
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Overdraft facility: Current account holders can withdraw more money than what is available in their account, known as an overdraft. This feature is exclusively available for current accounts and is not offered to savings account holders.
Savings or current account: What’s the right choice?
Savings account: Best suited for salaried employees or those receiving a fixed monthly income. This account helps individuals save and earn interest on their earnings.
Current account: Ideal for traders, entrepreneurs, and businesses that require frequent access to their funds for daily transactions.
By understanding your financial goals and transaction needs, you can make an informed decision between these two account types.
