Current vs. Savings Accounts: Key Differences

  • March 28, 2023
  • 4:50 min

Table of Contents

When opening a bank account, you are always asked whether you want savings or a current account. If you don’t know which one you should select, you will end up opening the wrong account that will not serve your purpose.

Understanding the difference between a current and a savings account will help you choose the correct bank account catering to your needs. So, what is the difference between the two?

Let’s see what is a current account and a savings account to understand which one you should pick that suits your requirements.

What is a Current Account?

A current account is a type of bank account that facilitates frequent transactions. Thus, you need a current account to withdraw money, receive frequent payments, and make purchases.

The primary purpose of the current account is to allow frequent changes to the account in terms of debit and credit transactions. Thus, you can manage and keep track of your income and expenses through your current account.

Also, read How You Can Get Paid as a Freelancer in UAE without a Bank Account?

Features of Current Accounts

Current account is the most suitable option for everyone who wants to receive money or make payments regularly. Let’s look at the features of a current bank account.

    • You can freely make multiple transactions from the current account without restrictions.

    • You get an overdraft facility with your current accounts where you can withdraw more money than your existing balance.

    • Current accounts don’t offer any interest income on balance maintained in the account.

    • Current account facilitates you to make payments, receive income, transfer money, and perform other banking transactions without restrictions.

    • The minimum balance requirement for current accounts is higher than the savings accounts.

Types of Current Accounts

Mostly, a regular current account will be the most suitable for your needs; however, there are two more types of current accounts that you can open with a bank. So, let’s understand three types of current accounts.

Regular Current Accounts Islamic Current Accounts Premium Current Accounts
These accounts offer regular features of a current account, and most banks in the UAE offer these accounts. Compliant with Shariah Laws of Islamic Banking, these accounts consider the mutual risk and profit sharing between parties as provided in the law. You can open a premium current account to get additional benefits and features if you maintain a higher balance.

Now that you know a current account, let’s also understand what a savings account is and its features.

What is a Savings Account?

A savings account is a bank account you use to deposit money and earn interest on the available balance. Savings accounts require lower minimum balances than current accounts.

The advantage of having a savings account is that you can earn interest on the amount you store in this account, which you don’t get when you have a current account. Moreover, it allows you to withdraw or transfer money as well.

Also, read Having A Digital Wallet Vs. A Regular Online Bank Account

Features of Savings Account

Let’s see the salient features of the savings account and who should have a savings account.

    • Savings accounts earn you interest on the balance you keep in your account.

    • Banks require lower minimum balances for savings accounts; some banks allow you to open savings accounts at zero balance.

    • Overdraft facilities are not available on savings accounts.

    • Savings account secures excess cash and earns you some return on it through interest. Hence, you can consider it as an investment.

    • Although you can withdraw money and make payments, a savings account will restrict the number of transactions. For example, you may withdraw cash four times a month from your savings account. 


Types of Charges on Savings Account

Although you earn interest income on the savings account, you may be charged different types of charges applicable to you. Let’s see which charges you might be paying if you decide to have one.

Transaction charges: Banks may charge a portion of your transaction amount as transaction charges even if you got your debit card for free.

Withdrawal fees: While some banks offer certain numbers of withdrawal transactions for free, many banks charge withdrawal fees for every withdrawal made from the savings account.

Monthly charges: When your balance falls below the required minimum balance by the bank, they will charge you monthly maintenance charges.

Statement charges: When you need a physical statement with the bank’s stamp, banks charge statement fees from your account.

Remittance charges: Every bank will charge remittance fees for the remittances you make in other countries.

Account closure charges: When you close an account, you are charged the account closure fees.

Thus, understand the charges carefully before you open a bank account, whether current or savings.

Now, let’s summarise the differences between the current and savings account in the table below.

Key Differences between Current Account Vs. Savings Account

Since both types of accounts serve different purposes, they differ broadly in terms of features offered. While the current account is better for business owners and individuals willing to make frequent transactions, a savings account is for those who want to invest money and earn regular returns.

Key Differentiator Current Account Savings Account
Purpose To allow multiple transactions (withdrawal, payments, etc.) without any restriction To secure the money deposited and provide interest on the amount deposited in the account
Overdraft Facility Allowed Not allowed
Minimum Balance Requires higher minimum balance than savings account Requires lower (sometimes zero) minimum balance
Interest Not provided Provided on the available balance
Transaction Frequency No restriction Restricted

The Bottom Line

Although savings account offers interest income, the interest rate is relatively low because it is less risky than any other form of investment instrument. Thus, you can consider a savings account when storing your money and earning interest securely. At the same time, the current account will let you make regular and frequent transactions.

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