A salary account is a type of savings account that is opened by an organization to credit the salary of its employees. Generally, banks open these accounts in the name of the employees at the request of the companies and organizations. A salary account comes with its varied features and benefits, which can be availed by the salaried account holder of the bank.
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A lot of people tend to get confused between savings accounts and salary accounts. For a better understanding of our readers, we have discussed both the types of accounts and the differences between these bank accounts in detail.
What is a Salary Account?
Salary accounts are mainly opened by employers for their employees. This account is opened to credit the monthly salary of the employees in a lump sum. One of the most important features of the salary account is that it is a zero-balance account, thus there is no condition to maintain the minimum balance.
Some of the banks in India offer different salary accounts based on the salary slab of the account holder. Even though the amount accumulated in the account is not entitled to any interest, there are many other benefits offered under the salary account.
What is a Savings Account?
Savings accounts are a basic financial service offered to the public. There are different types of savings accounts that an individual can open, such as online savings account, basic savings account, premium accounts and zero balance account.
Depending on the type of savings account, the account holder needs to maintain an average minimum balance in the account. Moreover, the benefits offered by these accounts vary accordingly.
Difference Between Salary Account and Savings Account
Let’s take a look at the difference between both accounts:
| Topic | Salary Account | Savings Account |
|---|---|---|
| Purpose | A salary account is opened by a company or organization to credit the salary of the employees on a monthly basis | Any individual can open a savings account with an Aadhaar card to deposit and save money in the long term |
| Minimum Balance Requirement | As it is a zero balance account, no minimum balance is required to maintain the account | It is mandatory to maintain a certain amount of minimum balance in the account |
| Interest Rate | Most of the salary accounts do not provide any interest | Based on the current interest rate, the interest on the accumulated sum is applicable quarterly |
| Conversion | In case the salary is not credited to the account for 3 months, then the bank converts the salary account into a regular savings account | In case the individual already has a savings bank account with the bank in which his/her company has a tie-up, then the employer requests the bank to convert it to a salary account |
| Who can open the account? | A salary account can be opened by the employer. To open a salary account a company must have a tie-up with the bank | Any individual can open a savings bank account |
Similarities Between Salary Account and Savings Account
Although these are some of the differences between both the accounts there are some similarities too. Let’s take a look at it-
- Both accounts offer the passbook facility
- Both the salary account and savings account send alert notifications for transactions
- An individual can enjoy the benefit of net banking in both accounts
- The account holders can also make use of the phone banking facility for both accounts
- No charges are applicable for using the ATMs
- Electronic fund transfer facilities can be availed in both types of accounts
- The individuals can avail the benefit of 24/7 banking services
- Salary accounts, as well as savings accounts, offer a quick and hassle-free account opening process with minimum formalities.
Even though salary accounts and savings accounts are considered more or less similar, they are a tad different. Generally, salary accounts are opened by employers to credit salaries whereas a savings account can be opened by any individual. Thus, people who change their job frequently must know the difference between both these types of accounts so that they don’t face any financial problems.
