How Do Salary And Regular Savings Accounts Compare

The salary account and current account have a wide range of differences. Both accounts perform different functions and are avid for different people. A salary account is a variant of a savings account meant for salary credits and is opened on your employer’s recommendation. 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. Maurie Backman is a personal finance writer covering topics ranging from Social Security to credit cards to mortgages.
  2. If your savings and salary accounts happen to be in the same bank, the bank can consider converting them.
  3. The banks give their salary account holders quick and easy access to loans.
  4. A salary account works like a savings account, yet it is not a savings account.

Keeping a check on the mentioned points will help you receive precise and faster results. A salary account typically remains active even if the account holder resigns from their job. However, it is always a good idea to check with the bank to confirm their policies.

How can I convert salary account into savings account?

If your salary account was your first account you’ve ever had in your life, it’s a good idea to transfer that account into the regular savings account. In this way, you’ll have a savings account in addition to your salary account. You can be credited from other sources and pay for your investments, such as SIPS or the syustematic investment plans, EMIs for a loan or insurance you might have purchased. The salary accounts enable employees to use online banking services like mobile/phone banking and net banking.

Salary Account and its use in a new job

An individual whose company maintains a salaried relationship with a bank can open a salary account. On the other hand, almost anyone can open a savings account by submitting the required documents and satisfying basic eligibility criteria. Even kids can have savings accounts, supervised by parents or guardians. Spends everything he needs on his credit card and writes them a sort of cheque (goes into the bank with ID and signs it) for the full balance when his statement arrives.

Day 14: What is Meant by Salary Account?

A chequebook helps in making payments without cash, a passbook records all your transactions, and a debit card makes cash withdrawal and online shopping easy. A salary account typically doesn’t require a minimum balance, but a savings account often imposes a minimum balance requirement. If you are not a salaried individual, you won’t have access to this account type as it is exclusively tailored to facilitate easier financial salary account vs savings account management for employees. A salary bank account also comes with several investment services that let you easily invest in government bonds, insurance products, etc. This serves as another layer of financial security, allowing you to grow your money without undue complexity. The smart investment plans can be a valuable tool in a salaried individual’s financial planning as they get returns on the invested capital.

Now, you might be thinking, if you’re putting your salary directly into a savings account of sorts, how are you supposed to pay your bills? The answer is, you can always withdraw funds from your salary account. But in reality, the whole forced savings nature of these accounts really works best if you’re in a dual-income household and are trying to live off of one salary and save the other. Otherwise, you may not get as much benefit from a salary account.

However, converting the salary account to a savings account requires a change in the same. If you fail to do so, all your information like credit/debit card bills and pins, an account password, chequebooks, etc will be sent to your ex-office. Commercial banks have a minimum balance requirement for their savings account holders. The balance changes from bank to bank and gets penalized if it’s not maintained. Employers create salary accounts to allot them to their employees.

However, the limit is sometimes higher than expected and varies from one Bank to another. Thus, you should check it beforehand to avoid unbearable expenses. The organization goes for a salary account in a bank they have a tie-up with. If the employer does not hold a salary account in the same bank, there is no need for another savings account. Now, you will have a savings account along with a new salary account. You will receive monthly payments in one account and can make various mutual fund or SIP investments or pay back your loans through the existing account.

If your savings and salary accounts happen to be in the same bank, the bank can consider converting them. A salary account is automatically converted into a savings account in a case where no salary has been deposited for three months. The timing of opening a salary account in India depends on the company’s policies and procedures. In most cases, companies ask employees to open a salary account when they join the company or before they receive their first salary. Some companies may also offer to assist employees in opening a salary account and provide them with the necessary information and forms.

Switching the old account and a new salary account will help maintain a balance in your personal and professional life. 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.

With integrations between the two systems, employees can easily sync data sets of one software with another. The HR software is designed to integrate with accounting software seamlessly. The HRM software makes it easy to add or edit employee details without affecting other processes.

Any individual above the age of eighteen can open a savings account to manage their expenses and income. Individuals below the required age can have joint accounts with a major like parents or siblings. However, almost all salary accounts are exempted from holding a balance. Bank account holders must maintain a certain level of balance all the time to avoid additional charges.