What's the difference between Checking and Savings Accounts?

Checking for everyday spending, savings for future goals. Understand the contrast to manage your money wisely. Learn more here!
Checking and Savings Accounts
3 min

What's the Difference Between Checking and Savings Accounts?

Checking and savings accounts are the most common types of accounts banks offer. Both serve unique purposes and offer features that are ideal for certain types of investors. A checking or current account allows you to carry out unlimited cash and cheque deposits and withdrawals every day, without any extra charges. This makes them perfect for business transactions. A savings account is perfect for personal use, where you can deposit surplus income and earn an interest. Banks offer different types of savings accounts with different minimum balance requirements, interest rates, and more.

What is a checking account

A checking account is a type of bank account used to cover daily and frequent expenses. In India, checking accounts are commonly known as current accounts. These accounts have no withdrawal or transaction limits, making them suitable for businessmen, traders, entrepreneurs, firms, and companies. The bank offers you a debit card and chequebook with the account to ensure easy withdrawals. You can make withdrawals at a bank branch or an ATM.

ACH transfers, wire transfers, and debit card purchases are also permitted on checking accounts. Online and mobile banking services ensure easy access to checking accounts at all times. Moreover, the difference in interest gains is a significant point in the checking vs. savings account debate. Checking accounts do not offer interest gains on the balance maintained since funds are readily available to the account holder whenever needed. Banks do not offer interest earnings on your current account balance to balance this extra liquidity benefit.

What is a savings account

Next on the checking account vs. savings account debate is understanding the features of a savings account. A savings account is a deposit account used to save money and grow the corpus at a nominal rate of interest. It is a safe investment avenue people use to park their savings that they do not need to use immediately. People can open savings accounts with different savings goals like building an emergency fund, saving up for a vacation, or accumulating capital for a down payment.

Savings accounts offer a debit card, chequebook, passbook, and Internet banking facilities to the account holder. While you can easily deposit and withdraw funds from the account, ATMs only allow a certain number of free monthly withdrawals.

Also read: Mahila Samman Saving Certificate

Differences between checking and savings accounts

Understand the differences between checking accounts and savings accounts to see which one is a better fit for you:

  • Purpose of use: The primary difference between current vs. savings accounts is their usage. A checking or current account is more suitable for businesses that conduct frequent transactions. Savings accounts are ideal for regular citizens looking to save their idle funds and build an emergency fund for the future.
  • Interest payout: Funds in a checking account do not earn any interest. However, funds deposited into a savings account earn interest. While not as high as post office tax-saving schemes, savings account interest rates vary from 2.70%-7% p.a. The interest is calculated daily on the total balance and credited quarterly.
  • Transaction limits: Transaction limit is one of the most essential differences between checking and savings accounts. There are no limits on the number of transactions you can make using a current or checking account, making them suitable for business owners who need to make frequent transactions. Savings accounts allow about 3-5 free transactions every month. Post that, all transactions attract a service charge. Moreover, there is usually a cap on the number of free withdrawals you can make at the ATM.
  • Balance requirement: Checking account holders need to maintain a higher minimum balance compared to a savings account. In fact, you can even open a zero balance savings account and skip the minimum balance requirement and low balance penalties.
  • Overdraft facility: A current or checking account offers an overdraft facility that permits account holders to withdraw more funds than the available balance. This is a boon for entrepreneurs who need to meet immediate financial obligations. An overdraft facility is not an in-built feature of savings accounts. In other words, you cannot spend more than what you have in your savings account.
  • Suitability: A checking account is best suited for businessmen, traders, entrepreneurs, firms, and companies who require access to unlimited, charge-free business transactions. A savings account is suitable for salaried employees or those with a stable monthly income who wish to earn interest on their saved liquid funds.


From the above discussion on checking vs. savings accounts, it is clear that both these accounts have their own advantages, making them best-suited for fulfilling certain types of banking needs. To choose between a checking and savings account, you need to consider your financial habits and goals.

With features like an overdraft facility, unlimited transactions, and zero withdrawal limits, checking accounts are ideal for business owners who make frequent high-value transactions. Alternatively, savings accounts help foster personal saving habits. The funds parked in your savings account earn interest, making such accounts great for consistent and goal-based savings.

Businesses benefit from the flexibility of checking accounts, while salaried and retired individuals benefit from the financial security of savings accounts. If you are a business professional looking to manage personal finance and business expenses, you can opt for both types of accounts.

Regardless of which account you pick, it is important to add fixed deposits to your financial portfolio to earn high and guaranteed returns. With a Bajaj Finance FD, you can earn interest of up to 8.85% p.a., while convenient tenures and flexible payout options help you reach your financial goals faster.

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As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer https://www.bajajfinserv.in/fixed-deposit-archives
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.