Salary Account vs Savings Account: Understanding the Differences
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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 the difference between Salary Account and Savings Account.
What Is A Salary Account?
A salary Account is opened on request by significant companies and organisations. The company asks to open a salary account for its employees and credits their salaries every month. When the disbursal time arrives, the bank takes the payment from the company’s account and distributes it to the employee’s bank account. This way, the salary account ensures smooth and timely income to the account holders.
What Is A Savings Account?
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 helps you earn interest on it. Being a savings account holder makes you financially secure and keeps you ready to meet sudden expenses. There are 0 balance savings account apps like Jupiter – powered by Federal Bank account, where you can do your digital banking activities.
What Is The Difference Between Salary Account And Savings Account?
The difference between savings and salary account is explained below in the table:
| Savings Account | Salary Account | |
| Purpose | Used for personal savings and transactions. | Designed for receiving monthly salary deposits. |
| Minimum Balance Requirement | Both Zero Balance and Non Zero Balance savings account options are available | All salary accounts are zero balance accounts. |
| Conversion | If you already have a savings account with the bank that your company has a partnership with, you can ask your employer to convert it into a salary account. | If salary is not deposited into the account for more than three months, the account will be changed to a regular savings account. |
| Interest Rates | Interest rate varies from bank to bank | Offers an interest rate on the deposits. |
| Who Can Open | Everyone above ten years of age can open a savings account | A salary account can be opened by individuals who receive a regular salary from their employer or by an employer itself. |
| Account Holder | Joint Account is possible with family, friends etc | Joint account is possible only with spouse or a blood relative |
| Fees & Charges | Nominal fee to open the account. | No Fees to open account |
| Privileges | Minimal paperwork, Phone, and net banking, etc. | Phone and mobile banking facilities, credit card facilities etc. |
What Are The Similarities Between Salary Account And Savings Account?
Below are some Common Features of a salary account and a savings account
- Quick and simple account opening process
- You Receive SMS alerts for transactions on your phone
- Gives Access to net and phone banking options
- No charges levied for using other ATMs
- Ability to make electronic fund transfers (IMPS/NEFT/RTGS)
- A similar process for issuing and printing passbooks
- Ability to collect or stop cheque payments
- 24/7 banking services are available
- Similar tax implications as other accounts
- You are eligible to apply for a credit card
- You can avail service at all branches, including withdrawals and deposits
- You can set up automated bill payments
Which one to choose between Salary Account and Savings Account?
The salary account vs savings account explanation shows that choosing one among them depends on the need and requirements of an individual.
Mostly, people own both 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.
Conclusion
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 have 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.
FAQs
1. 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.
2. 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.
3. Can I open salary account without salary?
No, you cannot open a salary account without salary being deposited in the account. It has to be opened by your employer. You can also ask your employer about other bank account to be converted as a salary account and inform the employer to deposit salary in that account. If you had a salary account and the salary stops being deposited over a period of time, your bank will convert this salary account to a normal savings bank account.
4. Can I put cash in my salary account?
Yes, you can put cash in your salary account. Salary account is a type of savings account which has additional benefits.
5. Can I keep two salary accounts?
Yes, you can keep multiple salary accounts.
