Money Basics · Banks, FDs & savings

Savings vs current accounts

Two types of bank accounts exist for individuals. They're not interchangeable.

Savings account

Designed for individuals who keep money and earn interest. What you likely already have.

• Earns interest: 2.5–7% depending on the bank
• Minimum balance required: ₹0 (zero-balance) to ₹10,000 depending on bank/branch
• Transaction limits: typically 5 free ATM withdrawals/month, unlimited UPI
• Cash deposit limits: up to ₹10 lakh/year without documentation (above that, banks flag for income tax scrutiny)

2.5–3.5%savings-account rate at most large banks

6–7%savings-account rate at some small finance and newer private banks. Worth comparing for large idle balances

Current account

Designed for businesses that transact frequently. Individuals don't need this unless running a business.

• Earns NO interest (zero)
• Allows unlimited transactions without triggering alerts
• Minimum balance: ₹5,000–₹50,000 depending on bank
• Overdraft facility: can spend more than balance (up to a limit, with interest)

> If someone tells you to open a current account for your personal salary, ask why. You're giving up interest for no reason unless you're a business.

Which one do you need?

Salaried individual: savings account only. Your employer's payroll system handles salary credit.

Freelancer/business owner: savings account for personal use + current account for business receipts. Keep them separate for clean accounting and tax records.

The upgrade move

If you have ₹1 lakh+ sitting in a regular savings account at 3%, move it to a bank paying 6.5% or use a sweep-in FD. That extra 3.5% on ₹1 lakh = ₹3,500/year for doing nothing.

That sweep-in option is built on top of a fixed deposit. Before you use one, you should know exactly what an FD does to your money once you lock it in.

Takeaway. Savings accounts earn interest; current accounts earn zero. Individuals need savings accounts. Maximise your rate by comparing across banks.