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Savings Account vs Salary Account – What’s the Difference?
Posted on Wednesday, January 3rd, 2024 | By IndusInd Bank
Salary accounts are designed for monthly salary deposits and usually require no minimum balance, while savings accounts are for general saving purposes and often have a minimum balance requirement. It is essential to understand how both these accounts work to carry out your financial functions optimally.
When it comes to personal finances, savings, and investments, most salaried individuals often deal with two types of bank accounts – salary accounts and savings accounts. Both accounts function similarly in regards to serving as a safe deposit for your funds as they earn a steady interest. To carry out your financial obligations effectively, you must understand the differences in purpose and usage between these two accounts.
In this in-depth guide, we shall go over the functions of these accounts, providing you with a comprehensive comparison between the two.
What is a Salary Account?
A salary account is a specialised savings bank account where an employee’s monthly salary is deposited by their employer. These accounts are often established through corporate tie-ups between companies and banks. As interest-bearing accounts, they accrue interest on the maintained balance, credited quarterly.
You are also provided with an ATM card for cash withdrawals and offline and online transactions. Additionally, you are provided with personalised cheque books for issuing payments by cheque. This type of account is tailored for the regular inflow of salary and may offer additional banking benefits.
What is a Savings Account?
A savings account is a general-purpose deposit account you can open with a bank to save and manage money. Apart from allowing for liquidity, these accounts are also meant for storing emergency funds.
Savings accounts also allow you to earn modest interest on your deposits. Banks also offer ATM cards, online banking, and offers and discounts on your savings account, helping you make the most of your money.
Difference Between Salary and Savings Account
Here are some major points of difference between a savings and a salary account.
| Points of Difference | Salary Account | Savings Account |
| Primary Purpose | A salary account is opened by a company or organisation to credit the salary to an employee. | A savings account is a deposit account that can be opened by anyone to deposit money for holding or saving it. |
| Conversion | When salary is not credited to your account for a certain time interval typically three months), the bank will convert your salary account to a savings bank account. | A savings account does not change its status based on whether money is deposited or not. However, if you wish to convert your savings bank account into a salary account, you can get in touch with your bank to get it done, provided your bank has ties to the organisation you work with. |
| Minimum Balance Requirement | You are not required to maintain a minimum balance. | Some savings accounts have a minimum balance requirement set by the bank. If your balance dips below this minimum limit, you will be charged a penalty. |
| Eligibility | You can only have a salary account if your employer has an existing partnership with a bank. Also, only an employer can open a salary account. | Anyone with an Aadhaar and PAN card can open a savings account. |
| Interest Rates | Interest rates offered are more or less the same. | Savings account interest rates are more or less the same as salary accounts. |
Maximise Your Savings with IndusInd Bank’s High-Yield Savings Account
While a salary account is ideal for salaried employees due to its specific benefits and features like regular salary credits and no minimum balance requirements, a savings account is more versatile, catering to the broader needs of saving and earning interest over time.
At IndusInd Bank, our savings accounts are packed with best-in-class features, such as
- Attractive rate of interest
- No physical documentation requirement during account opening
- Account number of your choice
- A wide array of digital banking services
- Discounts and offers on top brands
Save wisely while earning an attractive interest rate on your idle money with IndusInd Bank. Moreover, with our exclusive offers and discounts on lifestyle, travel, food, and shopping, you also get to make the most of your spending.
Start your online savings account opening process today. Visit our website to learn more.
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
