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Current accounts and savings accounts: what is the difference?

Current accounts and savings accounts serve different purposes – see how they work and what they can do for you.

What is a current account?

A current account is an account used for everyday banking. You can use it to: 

Explore: Benefits of a current account

What is a savings account?

A savings account is traditionally used for storing any extra money you have. They can earn interest, helping your money grow faster.

Explore: How to save money

Types of current accounts

Most banks offer standard current accounts and current accounts with extras. Current accounts with extras are sometimes referred to as packaged, or reward current accounts.

A standard current account provides:

  • debit cards
  • an overdraft facility
  • Direct Debit and standing order facilities
  • cheque books
They don't usually charge a monthly account fee.
 
A current account with extras may offer additional features such as:
  • access to higher interest savings accounts
  • travel insurance
  • mobile phone insurance

They may charge a monthly account fee.

Banks also provide basic bank accounts. These can be used for deposits and withdrawals, but won't offer overdrafts. Banks may also offer current accounts designed for students or graduates.

Explore: Choosing a current account 

Types of savings account

There are several types of savings account available. The one that will suit you will depend on your savings goals, how long you want to put your money away for and whether you have a lump sum to save. Here are some of the different types of accounts:

  • regular savings accounts - give you the opportunity to put away some money each month
  • easy access savings accounts - give you access to your money whenever you need it
  • notice accounts - require you to give notice when you want to take money out
  • fixed-rate savings accounts - are suitable if you can put a lump sum of money away for a fixed period of time
  • Individual Savings Accounts (ISAs) - enable you to earn tax-free interest (up to a certain amount)

Explore: Savings accounts vs ISAs: what's the difference?

Consider your options

A current account can be useful for managing your everyday banking, while a savings account can help you put money away to achieve your goals. 

Once you’ve decided which one you need, take some time consider the different types of accounts - to find the best one for you. You may want to think about what’s important to you and why. This can help you compare the different benefits and focus your search.

What next?

Visit our financial fitness hub for more tips and guides.

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