Can You Convert Your Savings Account to a Current Account?

When it comes to managing our finances, having the right type of bank account is crucial. In India, 78% of the population has a bank account, and the two popular banking options are Savings Accounts and Current Accounts. While a savings account is designed for individuals to manage personal funds, a current account caters to the dynamic banking needs of businesses. 

But what if you have a savings account and want to use it for business purposes? Can you convert savings to current account? In this blog post, we'll explore the features and purposes of both types of accounts and discuss banking options that may suit your needs.

What is a Savings Account?

A savings account is a basic bank account designed to help individuals save money while earning interest. Key features include:

• Interest earnings: Banks pay interest on the balance.
• Limited transactions: Suitable for occasional withdrawals.
• Low minimum balance: Ideal for salaried individuals and students.
• Purpose: Primarily for personal savings and expenses.

What is a Current Account?

A current account is tailored for businesses and professionals who need frequent and large transactions. Key features include:

• No interest earnings: Most banks do not offer interest on current accounts.
• Higher transaction limits: Suitable for high-volume banking needs.
• Higher minimum balance: Often requires a significant balance
• Purpose: Designed for day-to-day business operations.

Is it Possible to Convert a Savings Account to Current Account?

As per RBI mandate, you cannot convert a Savings Account into a Current Account and vice versa. If you have just started a business, it’s better to open a current account to manage your business transactions. You can have a separate Savings Account to deposit money and earn interest on the account balance. But since businesses carry out daily transactions often at bulk, it’s always good to open a current account to simplify your business transactions.

Benefits of Opening a Current Account 

Although you cannot convert savings to a current account, you can open a new one and enjoy its benefits. Some of the advantages include:

• Premium Banking Experience: A current account offers personalized services tailored to meet the needs of businesses. For example, you can get an ATM transaction limit of up to ₹1,50,000 per day.
• Overdraft Facilities: Current accounts often come with overdraft facilities that can help you manage your cash flow effectively. You can get up to ₹3 lakh unsecured overdraft facility. This means that even if you run out of funds in your account, you will have access to additional funds up to this limit.
• Free ATM Transactions: Many banks offer free ATM transactions for the first year when you open a new current account. This can save you money on transaction fees.
• Multi-City Chequebooks and Nomination Facility: With a current account, you can request multi-city chequebooks, which are convenient for business transactions across different locations. Additionally, you can nominate someone to operate the account in case of any unforeseen circumstances.
• Easy Transfer to Other Branches: If you need to relocate or expand your business, you can easily transfer your current account to branches of other banks without hassle.