From being an individual to a professional is the ‘journey from a savings account to a salary account!’
Yes, you read it right.
While a savings account is for all, a salary account is specifically for the salaried class. Anyone can be a salary account holder; however, only employees with regular income are allowed to hold a salary account. A salary account works like a savings account, yet it is not a savings account.
The blog helps you know how the salary account is different from a savings account.
Salary Account is opened on request by significant companies and organisations. The company asks for a salary account for its employees and credits your salaries every month. When the disbursal time arrives, the bank takes the payment from the company’s account and distributes it to the employer’s bank account. This way, the salary account ensures smooth and timely income to the account holders.
A salary account has many advantages and disadvantages. Let’s have a look-
Zero minimum balance maintenance is required to be a salary account holder. This feature saves the account holder from penalties or fines if the account balance exhausts or becomes less.
Another benefit to the salary account holders is debit card and chequebook services. The bank gives the individuals ATM cards to make online and offline withdrawals. They also get access to personalised chequebooks through which they can make payments.
A salary account gifts its members access to phone and net banking. The account holders can carry on with their transactions from the comfort of their homes.
Salary accounts typically offer reduced interest rates in comparison to other types of bank accounts. This is because the account is specifically designed for those who receive a regular income.
Another downside of using a salary account is that you may have limited access to your funds. This means that it may not be possible if you need to make a large withdrawal or transfer.
A savings account is an account for all. Everyone above ten years of age can open a savings account. The savings account stores your savings and help you earn interest on it. Being a savings account holder makes you financially secure and keeps you ready to meet sudden expenses.
Like the two sides of a coin, a savings account has its assets and liabilities.
The savings account acts as a support system during emergencies. It keeps your deposits safe and provides interest on it. It keeps you ready for all your future financial requirements.
Savings account smoothens the banking process by providing online and phone banking services. You can perform all the transactions, shop for your favourite goodies and make payments from the comfort of your home.
Opening a savings account has no age bar. It is open to everyone, including minors, teens, youth and senior citizens. Everyone above ten years of age can hold a self-operating savings account. This way, it teaches children and students to manage their funds. Also, it creates a safe space for the seniors.
The savings account increases your costs if your account reaches below the minimum monthly maintenance limit. The fine charged varies from bank to bank. If your account reaches below the minimum balance, the bank deducts the charges from the account, causing a loss in the monthly gains.
The banks and financial institutions are free to set interest rates. Thus, they may exploit the account holders by charging an interest rate as per their rules. Also, the fluctuations in interest rates lead to a lack of knowledge among customers.
The difference between salary and savings accounts is based on various parameters. Here is a detailed note on the Salary account and savings account difference.
When it comes to choosing between a salary account and a savings account, it is important to understand the difference between the two products. A salary account is an account that is opened by an employer in order to pay an employee their salary. A savings account, on the other hand, is an account that is opened by an individual in order to save money.
A salary account and savings account have nominal charges. The salary account is usually free as it does not have a minimum balance requirement. However, there are fees for opening a savings account.
The financial institutes offer interest rates on savings account and salary account. The interest earned depends on your salary and savings account type. Also, it is highly affected by the rules of the bank.
The salary account and savings account load you with many privileges. You can open your account with minimal formalities. After being an account holder of any type, you can perform all the transactions comfortably with a click.
|Salary Account||Savings Account|
|Definition||Credits regular salaries||Saves and provides interest on your deposits.|
|Fees and Charges||No minimum balance requirement.||Nominal fee to open the account.|
|Interest||Offers an interest rate on the deposits.||Offers an interest rate on all your savings.|
|Privileges||Phone and mobile banking facilities, credit card facilities etc.||Minimal paperwork, Phone, and net banking, etc.|
The salary vs savings account explanation shows that choosing one among them depends on the need and requirements of an individual. Mostly, people own both the accounts and allocate their funds. They use the salary account to receive their pay and use the savings account to save and manage their day to day expenses. This way, they can keep and use their hard-earned money rationally.
There are a few factors that make the differences between salary accounts and savings accounts more evident. A salary account works like a savings account, but each serves a different class of people. The accounts have a difference in eligibility criteria and minimum balance requirements. However, both the salary account and savings has a never-ending list of benefits. Thus, the banks have many similarities as well.
Choosing one among the savings account and salary account depends upon the needs and requirements of an individual. Yet, if you are confused, you can ask an expert and make apt decisions.
1. Which one to choose between a salary account and a savings account?
A salary account is only for professionals and employers receiving a monthly income. However, a savings account is for anyone above ten years of age.
2. Can a salary account have joint applicants?
You can have your spouse, parent or child as a joint applicant in the salary account. You need to submit the beneficiaries’ required information for the same.
3. Who can deposit cash in a salary account?
You, too, can deposit cash in the salary account. However, if it exceeds the over the counter transaction limit, it may attract a certain fee.
4. What is a savings account?
A savings account holds your savings and rewards a regular interest on the savings.