We usually open a bank account to save our money for utilizing it in the long run. However, we can we can save the money for frequent deposits and withdrawals and also for saving the money for a long time. Here comes into picture the two types of accounts that people usually have based on the above-stated phenomenon and they are current account and savings account.
If we dive deep and see both have a well set of differences between them in the categories mentioned below
The basic objective of the accounts
People usually maintain current account when there are frequent transactions that are to be made, usually the transactions that are not meant for savings or investments
Whereas the basic objective of savings account saves the money for long-term savings and investments
Minimum balance to be maintained
Minimum balance is the balance that has to be maintained in your account to avoid any deactivation of the same.
Current account demands more minimum balance to be maintained
Savings account, on the other hand, requires less amount as your minimum balance when compared to that of the current account.
Purpose of the account
Current accounts as the name itself suggest, are meant for current or frequent transactions and are not meant for any savings and investments. Current accounts are mostly used by business people who make transactions on a daily basis. As there is no restriction on the number of transactions you make on a current account, you can withdraw and deposit money anytime you want.
Current accounts usually belong to companies, organizations etc., and can also be opened in the name of the individual as a sole proprietor or running business in an individual name as long as the transactions are related to business only.
The savings account is primarily meant to save the money for investments. Savings accounts are ideal for people with regular income ie., salaried individuals and also for the people with considerable financial goals.
No interests will be provided on the money you deposit in your current account as the transactions made with this account are always frequent in nature.
When it comes to the savings account, they provide you interest depending upon the minimum balance you have in your account on a day to day basis. Also, due to limited transactions, one can accumulate more amount of money using the savings account
Transactions that can be carried out
You can avail limitless transactions using a current account as there are no restrictions imposed on any transaction you make.
Savings account have certain rules on making the number of transactions per month. You cannot withdraw money as many times as you want like you do with your current account.
An overdraft is a facility where you can withdraw more than what is present in your account but to a certain extent depending upon the limit of the account.
This comes to the aid of the customers when there are any fluctuations or shortfalls in the business they are acting upon
The overdraft is considered as borrowing on a short-term basis by the bank and therefore an additional interest is charged on the overdraft amount.
You can avail this facility only with a current account due to the limitless transactions it provides.
Whereas a savings account cannot provide this facility due to the accumulated sum of money that can be saved by using it.
Opening the accounts
Both current account and savings account in UAE require certain documents and eligibility criteria to avail them
The documentation of current account generally include
- Valid passport
- Copy of resident Visa
- Emirates ID
- Salary certificate
- Income source proof
- Proof of residence
Documentation of savings account is as follows
- Copy of Visa
- Salary certificate or reference letter
Eligibility criteria of Current and savings account in UAE are as follows
The person who wants to open the account should be 18 years of age and should be the resident of UAE to gain a current account whereas a savings account is usually provided to both UAE and non-UAE residents by most of the banks.
As a concluding statement, it’s wise and always better to open an account depending on your need of the moment than prioritizing an account based on the advantages it provides. Every account has its own perks and the need and purpose you own should be the deciding factor to go for an account.