What is the difference between a savings account and a current account?
The two accounts are intended to serve distinct purposes. Savings Accounts are designed to encourage people to save and use formal banking channels to manage their own finances.
A Current Account, on the other hand, is used for business purposes. The documentation and Know Your Customer (KYC) requirements for creating a Savings Account are significantly less onerous than those for a Current Account.
As a result, you cannot convert a Savings Account into a Current Account and vice versa, according to Reserve Bank of India regulations.
One can can shut her/his Savings Account, open a new Current Account, and move all of her funds from the former to the latter if she/he so desires.
Having both a savings and a checking account can be beneficial
The benefits of keeping Savings Account and acquiring a Business Current Account.
Savings Account Benefits
Savings accounts are a great place to start when it comes to financial planning, saving, and investing. They aid in the organisation of a person's finances.
They pay interest on the money that is deposited with them, i.e. the balances.
Savings Accounts are a good place to start building an emergency fund since the money is safe, generates a fixed rate of interest, and is convenient to access.
These accounts may be used for online and offline transactions, as well as cash withdrawals, because they come with a debit card and access to net banking.
Advantages of a Current Account
Because a Current Account is intended for commercial use, it comes with its own set of advantages. Consider the following scenario:
There are no limitations on the number of transactions that can be made in a current account.
Overdraft is available on the current account. This will assist you in overcoming her /his business's short-term cash flow problems.
With two accounts, it's easier to take advantage of tax benefits.
Yours's personal income and spending, as well as those for your business, would be kept separate if you maintained both Savings and Current Accounts open. When it comes to bookkeeping, this will be really beneficial.
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