Definition
Current Account Savings Account (CASA)
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Current account savings account (CASA) is a phrase loosely used to refer to bank accounts opened by people or entities for transactional and saving deposits.
CASA is an industry slang used in banks to refer to such accounts.
Savings account
A savings account is basically an account for one to hold his or her savings, usually from salaries.
Money would be deposited into the account which is interest bearing.
However, it is common knowledge these days that interest earned from regular savings accounts are hardly enough to cover inflation.
They earn simple interest annually, and when left untouched, would generate compound interest.
This is why consumer accounts such as fixed deposits and structured accounts are getting more popular. They come with better interest rates but more parameters of how the accounts are to be managed.
It used to be that savings accounts were purely used by people for savings and the withdrawal of cash from ATM machines once in a while.
But in recent times, it is common for savings accounts to be tied to debit cards where account owners can use VISA or Mastercard debit cards to used for retail and online transactions which directly deduct from the balance.
They are also commonly used for GIRO transactions for things such as insurance payments, home loan repayments, income tax payments, etc.
More and more savings account created for companies are also available today.
Because savings account are no longer used for the original purposes of such accounts, consumers who want better interest bearing accounts would go for other types of accounts as mentioned earlier.
Or they would open current accounts for daily use, and keep savings account clear of most other transactions for a “cleaner” statement.
Current account
A current account is a bank account that is mainly used for transactional or operational purposes.
The main differences between current accounts and savings accounts are:
- Non interest bearing
- Cheque book
There are of course more differences. But the above two factors are the key ones.
Saying that, some current accounts do come with interest bearing features.
The line that separates savings accounts and current accounts (CASA) are getting thinner with each day.
This is in huge part a result of technology.
Because cheque books are not really essential these days with online banking and easy bank transfers via apps that can be done.
For consumers, only unique situations would require writing a cheque.
For example, paying an option fee for buying a house. Even that can be done with cash if the amount is not substantial.
Current accounts are more suited for companies with a lot of cash flow to manage.
This is also why they can often come with credit lines and overdrafts for users to spend more than what is available in the account.
Usage of these credit lines would of course come with interest charges.
Differences between savings account and current account
It’s best to look at a table between the two types of accounts.
| Savings | Current |
| Interest bearing | Usually non interest bearing |
| Low minimum balance | High minimum balance |
| No cheque book | Cheque book |
| Few fees | Fees for usage like cheques, transfers, payments, etc |
| Basic internet banking | A host of services like payroll, accounting, phone banking, etc |
| More suited for consumers | More suited for businesses |
Opening of both types of account are usually require the same types of documents.
It also goes without saying that required documents for individuals differ from companies.
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