Definition
CASA (Current and Savings Account)
CASA refers to the combined balances in current and savings accounts, which are a bank's cheapest source of funds.
CASA stands for Current Account and Savings Account. For a bank, these deposits are low-cost because current accounts pay no interest and savings accounts pay relatively little, compared with the higher rates on fixed deposits. A high CASA ratio signals cheaper funding and stronger profitability for the bank.
For customers, a savings account earns modest interest and suits individuals, while a current account is meant for businesses with high transaction volumes and typically pays no interest but allows unlimited transactions.
Understanding CASA helps you see why banks reward you little on idle savings balances and why parking surplus funds in FDs, sweep-in accounts or liquid funds can earn more.
Related terms
- OverdraftAn overdraft is a credit facility that lets you withdraw more money than you have in your account, up to an approved limit.
- Savings Account InterestSavings account interest is the modest return banks pay on the balance in your savings account, calculated on daily balances.
- Sweep-in Fixed DepositA sweep-in FD links a savings account to a fixed deposit so surplus funds auto-move to earn FD interest, and reverse-sweep back when the account needs money.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.