What Is the Difference Between a Salary Account and Savings Account?

A salary account and a savings account are two common yet different types of bank accounts serving different purposes. While both accounts help individuals manage their finances, there are differences in the terms relating to withdrawal, interest, charges and more between the accounts.

In this article, you will learn in detail the comparison of salary accounts vs savings accounts.

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What Is a Salary Account?

It is a specialised bank account provided by employers to employees to deposit their monthly salary. Banks often partner with different companies to open salary accounts for their employees. It serves as a channel for receiving regular salary payments and facilitates various financial transactions, like fund transfers, bill payments, and withdrawals.

What Is a Savings Account?

A savings account is a standard bank account designed for saving and managing your money. You have the option to open various types of savings accounts, including online savings accounts, basic savings accounts, premium accounts, and zero balance accounts. Depending on the type of savings account, you are required to keep a minimum balance in the account.

What Is the Difference Between a Savings Account and a Salary Account?

The following table highlights the comparison of salary accounts vs savings accounts.

Point of Comparison	Savings Account	Salary Account
Purpose	Opened by an individual to deposit money as savings with the bank.	Opened by an employer to credit salary to the employee.
Minimum Balance Requirement	Maintaining a certain amount as a balance in the account is mandatory.	It is a zero-balance account. No minimum balance is required for maintenance.
Account Opener	Anyone above ten years can open this account	Employers open the account for their employees
Account Holder	Held and operated individually or jointly	Held and operated by an individual
Charges	A nominal fee is charged for opening this account.	No charges are applicable to open the account.
Eligibility Criteria	There are no specific eligibility criteria for opening this account.	You have to be an employee of an organisation to open this account.
Account Conversion	You can convert your savings account to a salary account if your organisation has a banking relationship with the same bank as yours.	If salary is not credited to this account for three months, the bank automatically converts this account to a savings account.

What Are the Similarities Between a Savings Account and a Salary Account?

Although there are differences between savings and salary accounts, you will find a few similarities. They are as follows:

Both salary and savings accounts include a hassle-free account opening process with minimum formalities.
You can earn interest income on the money you deposit in both accounts. Moreover, these accounts do not charge any amount for using ATMs.
Salary and savings accounts provide chequebooks, passbooks, and debit card facilities for easy account management.
You can also access both accounts remotely using the Internet facility and mobile banking.
Moreover, both accounts conduct online fund transfers using various payment methods like NEFT, IMPS, RTGS, UPI, and wallets.
Banks offer SMS alerts and notifications for all transactions made on both accounts to keep you informed.
You can utilise all the banking facilities 24/7, like applying for loans, recurring deposits or opening fixed deposits, checking bank balances, making investments, etc.

What Are the Benefits of Having Separate Savings and Salary Accounts?

The following are the benefits you can get for having a separate salary and savings account:

A separate salary and savings account will help you streamline your budget. It will help you to track your savings as well as expenses in a better way.
With a separate savings account, you will be able to set a target for savings each month. If you just have a salary account, then the chances of spending increase. Therefore, having a separate savings account can help to save your money consciously.
Both salary and savings accounts offer different types of rewards depending on the types of transactions that you make. Moreover, if you have these accounts in two different banks, you can avail more benefits.

In summary, when comparing salary accounts vs savings accounts, it becomes evident that while both serve as financial tools, they have distinct features and purposes. Understanding these differences allows you to make informed decisions that align with your financial needs and goals.

FAQs About Salary Account Vs Savings Account

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Can you deposit cash in your salary account?

Yes, you can deposit cash in your salary account anytime. However, if the monthly number of ‘over-the-counter transactions’ done for the account crosses a specified number, the bank may charge a small fee. Over-the-counter transactions include cash deposits, cheque deposits, and cash withdrawals.

Can you convert your savings account to a salary account?

You can convert your savings account to a salary account easily. To convert your account, you must contact your employer and fill out an application form. Moreover, you may also need to submit your employment proof and salary slip to the bank executive.

Can a salary account have joint applicants?

Yes. A salary account can have joint applicants, including your parent, spouse, or child. Additionally, you need to submit all the beneficiary's required information.