Difference between Current and Savings Account

With so many accounts to choose from, it can be difficult to make a calculated decision on whether to open a current or savings account, not to mention the different types of accounts in between. We look into the key differences between cheques and savings accounts.

Key Takeaways

  1. Purpose and Accessibility: Current accounts are ideal for daily transactions and offer easy access through ATMs, cheques, and debit cards. Savings accounts focus on growing funds through interest, with limited withdrawals to protect the balance.
  2. Interest and Financial Goals: Current accounts typically have lower interest rates, whereas savings accounts offer higher rates to help your money grow, making them suitable for long-term savings goals like emergency funds or large purchases.
  3. Choosing the Right Account: Selecting between a current and a savings account depends on your financial needs—regular access for daily expenses or higher interest for savings growth. It’s important to consider account features like fee structures and access limitations to make an informed choice.
How much do you need?
*Representative example: Estimated repayments of a loan of R30,000 over 36 months at a maximum interest rate including fees of 27,5% APR would be R1,232.82 per month.

Loan amount R100 - R250,000. Repayment terms can range from 3 - 72 months. Minimum APR is 5% and maximum APR is 60%.

What is a Current Account?

A current account offers easy access and is typically used for regular transactions, such as money transfers, debit card purchases, and cheque writing. To streamline transactions, these accounts often feature a debit card, chequebook, and a mobile app that offers features like online bill payments.

However, a major drawback is that banks usually do not offer interest on the balances in current accounts. Therefore, it’s beneficial to store funds not required for daily expenses in another account that accrues interest.

When evaluating current accounts, consider these essential features:

  • No monthly maintenance fees (or straightforward methods to avoid them)
  • Free access to an extensive ATM network
  • Minimal or no overdraft fees

Additionally, it’s beneficial to check if there are any incentives for opening new accounts, as some banks offer bonuses ranging from R1000 to R5000 or more for new customers who set up direct deposits.

When Is a Current Account the Better Choice?

If you need a bank account for daily transactions, a current account is the ideal option.

Most current accounts offer a range of features to facilitate daily money management. For instance, debit cards simplify the process of paying bills, allowing you to set up automatic payments with your utility providers. You can also arrange direct debits from your checking account for payments like credit card bills, mortgages, and car loans.

Whether you’re indulging in shopping sprees at Sandton City, enjoying dining experiences in Durban, or simply purchasing a coffee in Cape Town – the current account serves as your financial companion for all these moments and more.

savings account

What is a Savings Account?

A savings account is designed for storing money towards financial goals, making funds less accessible compared to current accounts. You cannot write cheques against a savings account, and typically, you’re allowed up to six free withdrawals or transfers each month.

Since savings accounts aren’t intended for daily transactions, it’s common to keep money in them for an extended period, allowing you to accumulate interest. Particularly, high-yield savings accounts often provide significantly higher annual percentage yields (APYs) than current accounts, helping your money grow more swiftly.

When selecting a savings account, here are key factors to consider:

  • APY: A higher APY means more interest earnings. Remember, APYs on savings accounts are variable, so banks may adjust them anytime.
  • Balance requirements: Some accounts demand a high balance to earn the stated APY. Opt for an account with a minimum balance requirement that is feasible for you.
  • Fees: Seek accounts that either do not charge monthly maintenance fees or offer simple ways to waive them.
  • Bonus: Many banks offer a cash bonus for opening a new savings account.

Much like current accounts, opening a savings account might also qualify you for a bonus.

When Is a Savings Account the Better Choice?

Choosing a savings account is primarily advantageous for one key reason: earning interest.

If your objective is to increase your savings, a savings account generally offers a more suitable environment for your money than a current account. It’s the perfect place for funds you don’t need immediately but also cannot risk losing—ideal for your emergency fund or a house down payment.

Furthermore, with a savings account, you benefit from compound interest, an advantage absent in non-interest-bearing current accounts. As your deposited money begins to accumulate interest, your balance grows, enabling you to earn interest on your accrued interest. This is the power of compound interest.

Teaching children the value of saving from an early age can set them on the path to financial success. Our guide on the best savings accounts for kids highlights options that offer competitive interest rates and educational tools to help young savers grow their wealth while learning important financial habits.

Cheque accounts

The Key Differences: Current vs. Savings

A current account functions as a workhorse – it’s crafted for the daily grind, managing your routine financial transactions, such as receiving your salary, settling your bills, or executing transfers. In contrast, a savings account resembles a well-guarded treasure chest. It’s where you store money that you don’t plan to use immediately, allowing it to grow over time and ensuring you’ll be in a better financial position in the future compared to today.

Interest Rates

The appeal of a savings account often hinges on its potential to generate earnings. Banks typically provide interest on the funds held in a savings account, a token of appreciation for entrusting them with your money. Over time, thanks to the magic of compound interest, your savings can grow significantly if left untouched. Conversely, current accounts aren’t structured as instruments for wealth accumulation. Due to their transactional nature, they often offer lower or even no interest at all. The assumption is that you’ll frequently move funds in and out of the account.

Accessibility of Funds

When it comes to accessibility, the current account takes the lead. Tailored for everyday use, it offers high flexibility for both withdrawals and deposits. Whether you’re shopping in the bustling markets of Cape Town or dining out in Johannesburg, your current account is prepared to cover your expenses. Savings accounts, however, tend to impose more restrictions. They may limit the number of free withdrawals you can make in a month, encouraging you to think twice before dipping into your savings.

Overview of Key Features: Current and Savings Accounts

FeatureCurrent AccountSavings Account
PurposeA convenient option for daily financial transactions and access to funds.Designed to grow funds through interest accumulation and save for future needs.
Access to FundsDirect access through ATMs, cheques, and debit cards.Limited withdrawals, focusing on preserving and growing funds.
TransactionsSupports everyday purchases, automated bill payments, and online transactions.Best used for infrequent transactions to avoid diminishing the principal amount.
InterestMay offer interest, but at a lower rate than savings accounts.Typically provides higher interest rates to enhance the growth of stored funds.
Account TypesVariants include basic, student, chequeless debit, and premium chequing accounts.Includes traditional, high-yield, money market accounts, certificates of deposit, and special savings accounts.
Financial PlanningOften used for managing regular payments and cash flow.Helps in saving for long-term goals like emergencies, major purchases, or vacations.
Protection FeaturesMay offer features like overdraft protection linked to a savings account.Provides safeguards against overdrafts and unauthorised transfers.
This table highlights the distinctions and functionalities of current and savings accounts, aiding in choosing the right type based on individual financial needs and goals.

Effective money management is crucial whether you’re using a current or savings account. Learn expert tips on how to manage your money, from budgeting strategies to making the most of your bank accounts, ensuring you stay on top of your finances and achieve your financial goals.

What Do You Need to Open a Current or Savings Account?

In South Africa, the requirements to open a current or savings account can vary slightly between banks, but generally, you will need to provide the following:

  1. Proof of Identity: A valid South African ID book or Smart ID card is typically required. Foreign nationals might need to provide a valid passport and sometimes additional documentation such as a visa or permit.
  2. Proof of Residence: Recent utility bill, lease agreement, or a bank statement with your address, dated within the last three months, to confirm your residential address. This is required to comply with the Financial Intelligence Centre Act (FICA).
  3. Minimum Age Requirement: Most banks require you to be at least 16 years old to open an account on your own. Younger individuals may need a parent or guardian to co-sign.
  4. Contact Information: A valid South African mobile number and an email address for account communication and verification purposes.
  5. Initial Deposit: Some banks may require an initial deposit to open the account, though the amount can vary. Some savings accounts can be opened with a zero balance.
  6. Tax Information: Your South African Tax Identification Number (TIN) may also be requested for taxation purposes.

It’s advisable to check with the specific bank for any additional requirements or variations in the process. Most banks now also offer the convenience of opening accounts online, which still adheres to FICA requirements but simplifies the process.

Secured Accounts

How Secure Are Current and Savings Accounts?

A current or savings account is significantly safer than carrying cash. You benefit from the robust security measures that reputable banks provide. Passwords, defences against unauthorised debit card transactions, and extensive online security protocols including firewalls, encryption, and multifactor authentication are part of this. These features are essential for safeguarding against identity theft and fraud.

Opening a bank account, be it current, savings, or both, is a crucial step in managing your finances and establishing a solid financial foundation over time.

Should I Have Both Accounts at the Same Bank?

Having your current and savings accounts with the same bank can be handy, yet there are some drawbacks to consider.

Making the Right Choice: Factors to Consider

The choice between a current account and a savings account may appear superficial at first glance. However, the consequences of this decision can profoundly influence your financial journey for years to come.

Evaluating Personal Financial Patterns

To determine which type of account suits you best, it’s crucial to reflect on your financial habits. Do you engage in frequent transactions, or do you prefer to let your money quietly accumulate over time? Recognizing these tendencies can provide clarity on the type of account that aligns with your lifestyle.

Goals: Short-Term vs. Long-Term

Consider where you envision yourself in the coming years. Are you saving for a car, or a home, or perhaps planning a sabbatical to explore the world? Conversely, are you thinking decades ahead, contemplating a peaceful retirement? Aligning your choice of account with these goals can optimize benefits and bring you closer to achieving your aspirations.

The Value of Financial Guidance

While introspection and research are valuable, professional financial advice remains invaluable. Financial advisors don’t merely possess textbook knowledge; they bring a wealth of experiential wisdom shaped by diverse client interactions. Their insights can illuminate financial pathways that you might never have considered.


While savings and current accounts share similarities, they serve distinct purposes. Before opening either type of account, ensure you check for any monthly fees and the conditions to waive them. Additionally, seek out accounts offering high APYs to maximise your earnings over time.

Frequently Asked Questions

What is the primary difference between a current account and a savings account?

A current account, also known as a current account, is primarily used for daily transactions and allows for frequent withdrawals and deposits. It often comes with a chequebook and a debit card. Conversely, a savings account is designed for storing money over a longer period, earning interest on the saved amount. It typically has limitations on the frequency of withdrawals to encourage saving.

Can I earn interest on a current account?

Generally, current accounts offer little to no interest as they are intended for regular transactions and not for saving money. However, some banks might offer a minimal interest rate on certain types of current accounts with higher minimum balance requirements.

Are there fees associated with current and savings accounts?

Yes, both types of accounts can have associated fees. Current accounts might have monthly maintenance fees, overdraft fees, and charges for issuing cheques. Savings accounts may charge fees for account maintenance or for exceeding the permitted number of withdrawals, though many banks offer fee-free options if certain conditions are met, such as maintaining a minimum balance.

Which type of account should I use for setting up direct debits or standing orders?

Current accounts are best suited for setting up direct debits or standing orders due to their flexibility in handling frequent transactions. Savings accounts are not typically used for these purposes as they are intended for accruing interest and savings over time.

How do I choose between a current and a savings account?

The choice depends on your financial needs. If you require frequent access to your funds for daily spending, bill payments, or receiving salary, a current account is more appropriate. If your goal is to save money for future needs and earn interest, then a savings account would be better. Many people find it beneficial to have both types of accounts to manage their finances effectively.