Savings Account vs Current Account
A Savings Account earns interest for savings, while a Current Account is for daily transactions with no limits or interest.
Savings Account vs Current Account
| Item | Savings Account | Current Account |
|---|---|---|
| Description | An account for saving money while earning interest. | A checking or transactional account, with service/maintenance fees applicable if the account balance does not meet the required minimum threshold. |
| Placement period | Unfixed. Account holders can freely deposit and withdraw money at any time. | Unfixed. Account holders have ready access to their funds to perform transactions seamlessly. |
| Interest Rate | Considerably low, typically in the range of 0.1% p.a to 4% p.a. | Generally as low as 0.05% p.a to no interest at all. |
| Facility | - Passbook - ATM/Debit card - Online/hardcopy statement | - Cheque book - ATM/Debit card - Overdraft - Online/hardcopy statement |
When do you need to use Savings Account?
This is a bank account specifically designated for saving money and giving you access to those savings when you need it. In most cases, this is used as a general-purpose account. You can open an online savings account here.
With a savings account, you can:
- Use a debit card to make cashless payments
- Track current balance with a monthly bank statement
- Withdraw money from ATMs
- Set up a joint account
- Make bill payments
The tradeoff for a savings account is that it does not really do anything much for your savings. The annual interest rates are typically very low (usually under 1% per annum), making these accounts more suited for storing money rather than growing it.
When do you need to use Current Account?
In many aspects, a current account (called a checking account in some countries) is the same as a savings account. Both are places to keep money if you need to access it quickly, they both have access to a debit card if you need one, and they have low minimum deposit amounts.
For most Malaysians, a savings account is enough to meet their daily and monthly needs. But if you need to issue payments with cheques, or if you make frequent transactions in and out of your account, consider a current account. You can open one online here.
With a current account, you can:
- Potentially make unlimited transactions each month with no fee, depending on account
- Track current balance with a monthly bank statement
- Use a debit card to make cashless payments
- Keep access to funds fluid to pay suppliers or transfer money to other companies
- Enjoy reduced costs on foreign fund transfers when you hold a foreign currency account
- Issue payments using cheques
- Set up a joint account
- Make bill payments
The tradeoff for this is that current accounts offer low interest returns – some accounts do not offer interest at all. The idea is that money in this account is not for saving, it’s a place where funds are stored with convenient access for constant withdrawals, transfers and payments.