Key differences between a savings account and current ?

venomx

Am i right in saying you can't pay bills with a savings account or have benefit money paid into one either ?
So basically if you want to put a lump sum and leave it there for a long period of time,
What else is different? 

JGB1955

A savings account pays interest. It may have restrictions on how many withdrawals you can make in a set time. It won't have a cheque book or debit card. You can (generally) only pay money in or take it out by transfers to and from a nominated current account.

Zanderman

A savings account is primarily designed for one thing - savings and interest on savings.  So that's all most savings accounts can do.

A current account is primarily designed for multiple things - a wide range of transactions - payments in and out, getting paid, buying things, paying for services.  

The distinctions can get blurred - many current accounts do pay interest, in an effort to make them attractive and competitive - banks want your current account business as they make (a bit of) money on many types of transaction.

Savings accounts can be flexible sometimes, though most are restricted.  But don't assume they're just for lump sums you leave for a period of time.  There are many many 'regular saver' savings accounts designed for putting away some savings every month. 

And, unless they have fixed rates with no access for a predetermined time period there's no need to leave money in them for any period of time.  They can be just useful places to park money away from the current account and access as and when needed.

colsten

Most savings accounts do not offer

• Direct Debits
• Standing Orders
• Debit cards or ATM cards
• Cheque books

Some savings accounts can only exist for a predefined length of time from account opening (e.g. Regular Savers, Fixed Term accounts)

Withdrawals / payments

• from some savings accounts are restricted to a linked current account in the account holder's name
• may be restricted to a given number a year
• may not be allowed before maturity (this applies to fixed term accounts) or after expiry of notice (Notice accounts)

Deposits

• into some savings accounts are only allowed from a current account in the account holder's name
• may be limited to a maximum amount per month and/or to a limited number (e.g. in Regular Savers)
• may only be allowed for a limited amount of time (e.g. fixed term accounts)
• may have to be by SO from a current account with the same provider

Some savings accounts do not have a sort code and account number but a roll number, or other provider-specific identification

Interest on some savings accounts is always tax free, regardless of the Personal Savings Allowance (these accounts are called ISAs)

For savings accounts, there is no switch service comparable to the Current Account Switch Service

Some savings accounts can only be opened in Branch, and not all of them can be managed online. Some are not available UK-wide.

Some savings accounts have upper age limits - e.g. less than 18 (children's accounts) or less than 40 (LISA)

Savings accounts do not require a hard credit check and are not listed on your Credit Reference Files

Savings accounts cannot go overdrawn

There are probably a lot more differences. 

colsten

venomx said:

Am i right in saying you can't pay bills with a savings account or have benefit money paid into one either ?

You are right and you are not right. There are definitely some savings accounts you could use to pay bills, albeit not by Direct Debit. There are also definitely some savings accounts you could have benefits money, or earnings, paid into.

venomx said:

So basically if you want to put a lump sum and leave it there for a long period of time,

Again, yes and no. There is a plethora of savings accounts which cater for all sorts of needs regarding the amount and/or length of time you want to keep the money in a savings account. You are also not limited to one savings account (but then, you are not limited to one current account, either).

RobM99

Savings accounts pay "!!!!!!-all" interest, current pay less than that!

colsten

RobM99 said:

Savings accounts pay "!!!!!!-all" interest, current pay less than that!

Whilst interest rates are obviously at an all-time low, it is still possible to find inflation-beating rates for both, savings and current accounts.

epm-84

venomx said:

or have benefit money paid into one either ?

To have benefit money or a salary paid in to an account you need an account with it's own sort code and account number.  All current account have this but some saving accounts (especially those with building societies) don't and you must use a reference number when paying in.  So, for instance a Virgin Money savings account does have it's own sort code and account number but a Nationwide savings account does not.

Money in savings accounts is often harder to access - you can set up a direct debit from one to pay your bills and you don't get a debit card for one.  A limited number do give you a cash card, which allows you to withdraw your savings at ATMs, I think some Post Office accounts do.

born_again

RobM99 said:

Savings accounts pay "!!!!!!-all" interest, current pay less than that!

Not always !!!!
Santander 123 Current Account. Monthly interest of 0.60% AER
Santander 123 Regular Saver. 0.50% AER/Gross (fixed) for 12 months.
Santander e-saver. 0.05% AER/gross (variable) for 12 months
Santander Everyday Saver. 0.01% AER/gross
Even their Fixed term pay less than the 123 Current account... And that is not the highest interest rate you will get on a current account.

colsten

epm-84 said:

 So, for instance a Virgin Money savings account does have it's own sort code and account number but a Nationwide savings account does not.

Historically, Nationwide savings accounts did not have a sort code and account number. However, their more recent savings accounts, e.g. the Flex Online Saver and the Start To Save account  do. 

epm-84 said:

Money in savings accounts is often harder to access - you can set up a direct debit from one to pay your bills

I think you were meant to say you generally can not set up a direct debit from a savings account. There are some exceptions but they are very few and far between, and I don't think anyone would suggest those exceptions should be used to pay bills.

colsten

born_again said:

RobM99 said:

Savings accounts pay "!!!!!!-all" interest, current pay less than that!

Not always !!!!
Santander 123 Current Account. Monthly interest of 0.60% AER
Santander 123 Regular Saver. 0.50% AER/Gross (fixed) for 12 months.
Santander e-saver. 0.05% AER/gross (variable) for 12 months
Santander Everyday Saver. 0.01% AER/gross
Even their Fixed term pay less than the 123 Current account... And that is not the highest interest rate you will get on a current account.

Don't ignore that there is a monthly fee on the Santander 123 which slashes the value of that 0.60% AER.

Virgin Money, Halifax Reward and  Club Lloyds all pay higher interest, albeit on different max balances. 

Still, you are right, there are many savings accounts that pay worse interest than the few remaining interest-paying current accounts.