"Bank account" can mean many different things: let's explore them together

Reading time 4 minutes

Published on 10/12/2025

We often hear the phrase "bank account" in conjunction with others like "current account" and "deposit account". Recently, the European Commission invited Member States to promote a common bank account model that is easy to use and may include incentives, such as tax benefits: the "savings and investment account".

Let's explore the differences.

The Current Account: Your Money's Warehouse

We've discussed current accounts several times on our website: you can think of them as a company's warehouse.

A warehouse is constantly in motion: goods arrive from suppliers and leave for customers or production departments. Every incoming and outgoing item is carefully recorded. Similarly, money flows in and out of a current account: income such as your salary comes in, while expenses like bills, rent, and mortgage payments go out. Your bank statement is the record of all these transactions.

Just as a warehouse doesn't produce goods, a current account usually doesn't generate significant interest. Money kept in a current account doesn't grow—or grows very little. Its purpose is different: to manage cash flows—making, receiving, and recording payments. For your savings, it should only be a temporary storage space.

The account balance is like the stock in the warehouse:

• if it's too low, you might struggle to cover unexpected expenses;
• if it's too high, your savings remain idle - just like goods sitting in a warehouse.

Growing your savings isn't the "job" of a current account: that's up to you. But how?

Deposit Account: A First Step

A deposit account (or savings account) can be one of the simplest ways to invest your savings while enjoying the same level of security as a current account.

A deposit account can be unrestricted, allowing you to withdraw funds at any time without penalties, or time-restricted, meaning you can only withdraw at the end of a set period (e.g., 12 months) or by paying penalties - usually forfeiting accrued interest. Unlike current accounts, deposit accounts typically don't offer services such as automatic bill payment or payment cards. However, they generally offer higher interest rates than current accounts, which increase with longer terms and stricter withdrawal conditions.

A deposit account is a simple solution, but not a definitive one for investing your savings. Returns may seem attractive at first but are usually lower - especially after taxes - than those offered by similar low-risk investments such as Treasury Bills (BOTs). To grow your savings or even just offset inflation, you need to accept at least a small amount of risk and invest in financial instruments such as bonds and shares.

A New Idea for the Future: The Savings and Investment Account

Although investing has become easier over time - today, just a few clicks online - Italians and Europeans still keep a significant share of their savings in bank deposits.

To simplify investment choices and encourage Europeans to invest, on 29 September the European Commission issued a recommendation to Member States to introduce a new type of account, very different from the previous ones: the "savings and investment account".

Although details are still being defined, the "savings and investment account" is intended to be a special account that could benefit from favourable tax treatment and allow small, regular contributions - such as €10 per month - to be invested in a portfolio of financial instruments like shares and bonds through investment funds and ETFs.

This recommendation draws inspiration from solutions already available in several countries. In Italy, for example, the tax benefits expected for "savings and investment accounts" are similar to those offered by Individual Savings Plans (PIR). Many banks and intermediaries also offer accounts with automatic or simplified methods for investing in funds and ETFs.

Why Does It Matter?

Making investing easier and more accessible would help people grow their savings, protect them from inflation, and build capital for major goals - such as paying for children's education, buying a home, or enjoying a secure retirement.

There would also be benefits for the EU economy. Greater participation in European financial markets would mobilise part of the savings currently sitting idle in current accounts, directing them towards long-term investments that support growth, innovation, and competitiveness.

Don't Forget the Risks

The Commission is not advising citizens to invest in high-risk products or to allocate all their savings to these new accounts. Its goal is simply to provide broader, more informed access to investment opportunities. Before investing, you should always assess your risk aversion and remember that returns and risks go hand in hand: the higher the return you aim for, the more risk you must be willing to accept.