Salary Account vs Current Account: Key Differences & Which One To Choose

While a salary account is to help you get your monthly income on time, a current account is opened by individuals to perform daily transactions. Delve deep into the write-up to learn about Salary Account vs. Current Account and get a clearer understanding of their working.

Salary Account vs Current Account

When it comes to banking, there are different types of accounts that help you in different ways. Salary accounts and current accounts are both types of bank accounts that allow account holders to deposit, withdraw and manage their money. Both have their own set of benefits, so it really depends on your needs as to which one would be ideal for you. Businessmen, wholesalers and investors use a current account for their day-to-day transactions. In contrast, a salary account is opened by employers for their employees.

Let’s take a look at the key differences between a salary account and a current account to help you make a decision.

What is a Salary Account?

A salary account is explicitly for employees belonging to organizations specifically opened to disburse the employees’ wages directly from the company’s bank account. Salary accounts are usually linked to the employee’s payroll so that their salaries can be automatically deposited into the account each month.

In order to open a salary account, salaried individuals typically need to submit their employment details and income proof to the bank. The documents required vary from bank to bank but usually include a copy of the applicant’s latest payslip and employment letter. Some banks may also require additional documents such as a copy of the applicant’s identity card or passport.

How Does a Salary Account Help Me?

• Zero Balance Account

  A salary account is mostly a zero-balance account. Thus, the account holders or the employees need not worry about the minimum balance requirement. Account holders are exempted from fines charged due to balance exhaustion.

• Net and Phone Banking

  Opening a salary account gives you access to the net and phone banking services. The online banking facilities help you complete all your tasks without the hassle of long queues and never-ending bank visits. You can make all your transactions instantly.

• Easy Access to loans and other services

  The banks give their salary account holders quick and easy access to loans. There are concessions to the interest rate as well. Some banks provide various other benefits like cash back, perks on shopping and instant transfers.

What is a Current Account?

A current account is a type of bank account that allows businesses and individuals to manage their day-to-day financial transactions. This includes making and receiving payments, transferring money, and managing direct debits and standing orders.

You can open a current account in any commercial bank. However, the current account does not pay any interest as it supports frequent transactions.

How Does a Current Account Help Me?

• Handles bulk payments and receipts

  The primary feature of the current account is that it handles bulk payments and receipts. The account holders can make limitless deposits and withdrawals. Thus, it serves big firms and investors having more frequent transactions.

• Overdraft services

  Banks also support their current account holders with overdraft services.

  Overdraft service is the protection issued by the banks on Non-sufficient account balances. The bank temporarily bears the cost and charges a fee for the same.

• Unlimited withdrawals

  The current account allows its members unlimited withdrawals. The account holders can make a withdrawal anytime and from anywhere.

Difference between Salary Account and Current Account

The salary account and current account have a wide range of differences. Both accounts perform different functions and are avid for different people.

Find out which account will help you in the most suitable way by reading the given differences.

Purpose

A salary account is primarily meant for receiving and managing one’s salary, whereas a current account can be used for a variety of purposes including transactions, deposits, withdrawals, and so on.

Fees and Charges

Opening a salary account is usually free as it is a zero-balance account. Also, it does not have any specific penalties. However, a current account requires lengthy paperwork and a fee to open the account. It also charges if you avail of any extra services.

Interest Rate

The salary account provides interest on the deposits. Since the current account is designed for more extensive and frequent transactions, it does not pay interest on the deposits. The account supports only current deposits and withdrawals.

Privileges

Both the Current account and salary account offer a variety of privileges. For example, the credit card facility is available for salary account holders but not for people with a current account. Similarly, the bank charges a higher rate if you make more transactions through your salary account. However, unlimited transactions are allowed for free for current account users.

Debt Facility

If you have a salary account and get paid regularly into it, then you are eligible to apply for a credit card. On the other hand, having a current account makes it difficult to get a credit card, but it also gives you access to an overdraft facility within the same account.

Which one to choose between the Salary account and the Current account?

It is not rational to choose between both accounts by just looking at the differences. To make the right choice, you should consider your requirements and utilities. If you are a business owner or an investor making huge transactions daily, you should go for a current account. But, if you are from the middle-income class group, receiving a salary every month, then your employers will prefer a salary account for you. Thus, you should consider all these factors before choosing an account.

Final Say

After the detailed discussion of the salary account vs the current account, you must have figured out the most suitable option. Both accounts have different pros and cons. However, they have some similarities as well. The primary similarity is that both benefit a particular section of society. The salary and current accounts simplify banking for middle and high-income groups. Hence, you can go for any of them to fulfil your day-to-day needs.

FAQs

What is a current account?

A current account is an account specifically meant to support your day-to-day transactions. The current account is for firms and businesses performing regular and hefty transactions.

Is salary account savings or current?

A salary account is a type of savings account. It saves your money and gives interest on the deposits like a savings account. The account supports limited transactions.

Can we make deposits in the salary account?

Yes, you can make deposits in your salary account. However, sometimes you have to declare the source of the income.

Is an ATM card available for a current account?

Yes, all banks provide current account holders with an ATM card.