A comparison of current and savings accounts
With so many types of bank accounts to choose from, it’s important to know the differences so you can make an informed decision about which account might be right for you. On this page, we’ll look at current accounts vs savings accounts in Ireland, going in-depth on what each one is and the difference between current and savings accounts.
A current account allows you to access everyday banking services, such as getting paid and making purchases
A savings account pays interest, but has more restrictions than a current account
Both current and savings accounts tend to feature different perks, services, and charges
What is a current account?
A current account is for everyday banking needs, offering services such as receiving your salary, making cash withdrawals and deposits, paying bills, and setting up direct debits. It's the account you use for day-to-day financial transactions, providing easy access to your money. You can open a current account with most banks and building societies, and usually manage your account online or via mobile banking.
If you’re looking for a current account that’s right for you, key considerations might include:
1. Fee charges
Some current accounts charge a monthly fee. These fees might give you the benefit of lower overdraft rates, high interest rates for account balances or a higher overdraft buffer amount. Depending on the current account you choose, the benefits you receive from paying a monthly fee might outweigh the cost of the fee.
2. Funding requirements
3. Credit interests
Some high interest current accounts offer competitive interest rates, but typically only on part of your balance, after which you won’t earn more interest. You might want to consider opening a savings account and maximising your returns by depositing any money you have above the first part of your balance into a savings account with a better interest rate.
4. Overdrafts
Overdrafts are a form of credit that allows you to spend more than the sum of money you hold in your current account. If you are considering using an overdraft, you should also compare current accounts, which charge a low interest rate on overdrafts. There are two types of overdrafts, called arranged and unarranged overdrafts.
With arranged overdrafts, the bank agrees to the amount you can overdraw. An unarranged overdraft is where you have either exceeded your arranged overdraft, or you have gone overdrawn without an arranged overdraft.
5. Access to your accounts
The most notable benefit of a current account is the flexibility of being able to access your account and your money whenever you need to. Some current accounts offer online and mobile access, while others are more traditional and require visiting a branch or using telephone banking to manage your account. Most banks offer contactless payment as standard, but you should still check, as it’s not provided on every current account.
6. Cash machines
What is a savings account?
With savings accounts, you simply deposit your money and earn interest on your savings. The higher the interest rate and amount of money you deposit, the more you’ll earn, depending on the terms of the account you choose. There are different types of savings accounts to choose from, depending on your savings goals.
- Demand deposit accounts – flexible savings accounts with competitive variable interest rates that allow you to make withdrawals and deposits at your convenience
- Deposit accounts – lump sum savings accounts with fixed terms typically between six months and five years, which offer competitive fixed interest rates
Is there a difference between a current account and a savings account?
There are differences between current and savings accounts. A current account is usually a better choice for the everyday management of money and for transactions such as withdrawing cash and paying your bills. A savings account is better for doing exactly as the name implies, and saving your spare cash to earn interest on it.
Current accounts
- Current accounts are transactional accounts. This means you can make withdrawals with few limitations on the amount you withdraw and how often.
- Many Irish current accounts are fee-free, but some come with monthly fees, normally in exchange for cashback and other benefits or rewards.
- Current accounts don't usually offer interest, no matter how much money you have in the account, unless you open a high interest current account.
- Most current accounts offer an overdraft, allowing you to spend beyond your current balance, up to a pre-approved limit. However, interest is charged on any amount you borrow beyond your balance.
Savings accounts
- Savings accounts are a form of investment rather than a transactional account. You're essentially allowing your bank to use your money as a loan they can earn returns on and, in turn, pay you interest.
- Savings accounts typically place restrictions on how frequently you can access your money. This is so you can earn a more competitive rate of interest.
- You'll normally find that savings accounts have fewer administrative fees than current accounts. This is because they are less expensive than current accounts to administer.
- You can earn money simply by storing your money in a savings account.
Should I open both current accounts and savings accounts?
Many people have both current accounts and savings accounts. Current accounts provide a convenient way to pay for everyday necessities such as shopping and bills. You won’t usually earn interest on your deposits, but your money is easily accessed and easier to spend.
Opening a savings account allows you to commit a portion of your money and build up your savings according to your savings goals, whether that’s saving for a rainy day, saving for retirement, or saving for a special event.
Can I use a savings account as my current account?
Some savings accounts now offer features that were once only available with current accounts, such as cash cards or debit cards, that allow you to withdraw your money or make transactions easily. However, current accounts typically feature less competitive interest rates.
There are still many everyday features that are only available with current accounts, including paying bills by direct debit and receiving your salary. Savings accounts such as demand deposit accounts provide the flexibility to withdraw money at any time you wish but offer lower interest rates than other types of savings accounts.
Can I have a savings account without a current account?
If you’ve chosen a bank you’d like to save with, and you don’t already have a current account with them, they may require you to open a current account. You don’t, however, have to open a current account. At Raisin Bank, we will open an account simply to service your savings account transactions.
If you’re a beginner saver, you might prefer to use our simple savings service, as we do all the legwork for you and simply show you where you can get the most competitive interest rates.
How much money should you have in your current account?
How much money you should have in your current account will entirely depend on your personal circumstances, such as your income and monthly bills. However, it’s always best to have a little bit spare each month, just in case.
It’s important to stay on top of your personal finances, and that’s easy to do with our free budget planner.
Can I use a current account as my savings account?
One of the main benefits of savings accounts is a competitive rate of interest, but you’ll only earn a good interest rate when you deposit your money and leave it in your savings account to grow.
Current accounts offer low rates of interest or none at all, so they aren’t really an alternative to savings accounts.
If you want to quickly and easily open savings accounts, register with Raisin and apply for free today. We don’t charge you for opening savings accounts through our online marketplace.
Save with Raisin Bank
Grow your savings while benefitting from competitive interest rates with Raisin Bank’s high-yield savings accounts. Whether you prefer the stability of fixed-term deposits with or the flexibility of demand deposit accounts, we have options to suit your needs. Enjoy attractive returns, easy access to your funds, and the peace of mind that your deposits are protected up to €100,000 under the Deposit Guarantee Scheme. Apply to open a savings account today and watch your money grow!