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Are you a salaried person and new to the field? Your employer must have asked you to open a salary account with a particular bank. This question must have popped up in your mind, viz. “What is the difference between a savings account and a salary account?”. If yes, this article is for you.
Difference between a Savings A/c and a Salary A/c
|Particulars||Savings Account||Salary Account|
|Purpose||To encourage saving habit||To credit salary|
|Who can open it?||Anyone||Salaried persons only|
|Account holding capacity||Individual/Joint||Individual only|
|Minimum balance requirement||Required in some banks/providers, e.g. Rs. 500 in post office savings account||NIL|
|Credit Card||Offered by some providers, not all||Offered depending on one’s monthly salary package|
|Loan disbursal||May get difficult depending on various factors like low credit score, instability in finances, etc.||Easier to get a loan since regular credit of salary provides security|
Similarities between a Savings A/c and a Salary A/c
|Credit Card||Offered (based on one’s salary)|
Should I close my old salary account after a job switch?
If you are switching jobs, this question must have popped in your mind as to “what to do with my salary account now”? “Should I close it”? “Should I convert it into a savings account?” Making these decisions ain’t rocket science and all you require is just the right amount of information that we are providing here:
Case 1: If your new employer shares a salary account agreement with the same bank, consider continuing with your current salary account.
Case 2: If your new employer shares their salary agreement with another bank, consider this:
- If this was your first salary account, you should consider keeping this as your primary account (provided the service charges levied suit you).
- If you already have a primary savings account, compare both the accounts, i.e. your primary savings account and your current salary account and decide which one better suits your needs.
Now comes your debit card. Does it give you good offers? Does it suit the way you spend, i.e. does it help you save as you spend? If yes, continuing with this account might be more beneficial. Consider converting it into a savings account to keep the benefits coming.
Not sure of maintaining an average monthly balance? Converting your salary account into a savings account may not be beneficial. Many banks have an average monthly balance requirement that can be anywhere from Rs. 500 to Rs. 10,000. If not complied with, these banks may charge steep penalties.
However, some savings accounts (like a basic SBI savings account) do offer zero minimum balance requirements.
Please note that if the salary is not credited to your salary account for 3 consecutive months, the bank shall convert it into a savings account. Consequentially, all exclusive benefits of a salary account shall cease to exist.
To sum it up…
While a salary account is a type of savings account, certain aspects make it different from its parent (savings A/c). Thus, compare the features and benefits of both types well before closing your salary account or converting it into a savings account.