Salary Account Vs Savings Account
06 Jul 2022
Table of Content
A bank account is usually the first thing you need to begin your Savings journey. Indian Banks offer a wide variety of accounts wherein you can deposit money, earn interest income and build a corpus. Of these, the most common accounts are the Regular Savings Account and the Salary Account. In this article, we have compared the differences between Salary Account and Savings Account.
What is a Salary Account?
A Salary Account is a dedicated account where your employer deposits your monthly income or salary. Companies and corporations typically tie-up with banks to open Salary Accounts for their employees.
What is a Savings Account?
A Savings Account is one in which you can deposit money to build your savings. You can use this account to manage your day to day finances. Savings Accounts can be of various types, and a Salary Account is also considered a type of Savings Account.
Salary Account vs Savings Account – Comparing the Differences
The following are the differences between Salary Account and Savings Account.
• Minimum Balance Requirements
You can withdraw all the funds from the salary account, which is why it is also known as a zero balance account. However, with Savings Accounts, you must maintain the minimum average balance required by the bank. This amount differs from bank to bank.
• Account Holding and Operation Status
Employers open Salary Accounts for their employees, and the account is held and operated on an individual basis. As for Savings Account, you can open the account on an individual or joint basis and operate it jointly as well.
• Eligibility Criteria
You need to be employed with an organisation to open a Salary account and qualify for the benefits that go with it. However, there are no specific eligibility criteria to open a Savings Account. Anyone who can provide the necessary documents required by the bank can open this account.
• Account Conversion
Banks will automatically convert your Salary Account to a Regular Savings Account if no salary has been credited into it for three consecutive months. On the other hand, if you have a Savings Account with the same bank with which your employer has a banking relationship, you can convert the Savings Account to a Salary Account.
• Choice of Bank
Since companies have tie-ups with banks, their employees do not get to choose their preferred bank for Salary Accounts. Conversely, when you open a Savings Account, you can do so in your preferred bank after assessing their average balance requirements, interest offered on savings, and other critical parameters.
Similarities Between a Savings Account and a Salary Accounts
The common attributes between Salary and Savings Accounts are as follows.
- You can earn interest income on both Salary and Savings Accounts deposits.
- Banks provide you with chequebooks, passbooks and debit cards with both accounts.
- You can access both accounts remotely using services like internet and mobile banking.
- You can efficiently conduct online fund transfers via NEFT, IMPS, RTGS, UPI payments and wallets, etc., from both accounts.
- You can just as easily receive payments from anyone into both accounts.
- Banks provide SMS alerts and notifications for all transactions conducted on both accounts.
- You can utilise all the banking facilities such as loan applications, opening fixed deposits or recurring deposits, making investments, checking account balances, etc., with both Savings and Salary Accounts.
Account Opening and Interest Rates
In most cases, a bank representative visits your office to open your Salary Account. You only need to provide a copy of your PAN, ID, and address proof document, along with your photographs. The bank representative hands over an instant account-opening kit with the cheque book, passbook, debit card, and internet banking information. If you wish, you may apply for a personalised debit with your name embossed on it.
Unlike Salary Accounts, banks allow you to open a Savings Account online from the comfort of your home. You simply need to visit your preferred bank’s website, fill out an online form and submit scanned or soft copies of your PAN, ID, and address proof documents. The bank may conduct a physical or video-KYC procedure, after which it opens your account and sends you the cheque book, passbook, debit card, and internet banking information.
Note that the interest rates for both accounts depend on the bank with which you have the account.
Open Your Account with Bank of Baroda
Whether you wish to open a Bank of Baroda Salary Account or Savings Account, you can do so conveniently. While anyone can open a Bank of Baroda Savings Account, you must check with your employer if you can open your Salary Account with us. Enjoy attractive interest rates on your account deposits and take advantage of the incredible suite of facilities we offer to you as a Bank of Baroda customer.
What is savings account
Most Indians are familiar with bank accounts, and most of you will have a saving account. Let’s look at saving account meaning, how you can open one and make the best of it.
Banks have many types of accounts, the main ones being current account and saving account. The saving account definition should give you some indication about what it’s all about – it’s about saving. Of course, there’s more to a saving account that just that. So let’s find out what is a saving account and its features.
A saving account is meant for individuals and salaried people to meet their personal requirements. The main function is to ensure liquidity. It enables you to make and receive payments. For example, you deposit the cheques you receive in your saving account, and use the account to make payments. And when you need cash to meet your day-to-day requirements, you just withdraw it from your savings account.
Most banks today offer Mobile and Internet banking, so the process of making and receiving payments has become so much easier. You hardly need to visit the bank branch to make any transactions. You can withdraw cash from an ATM, can transfer funds online to pay bills, make purchases, send money to your family in another city etc.
So the saving account meaning includes liquidity and saving. But the emphasis is more on liquidity. Sure, your saving account does offer you interest on the balances you keep in it. But these are on the lower side, ranging from 3-6 percent. This will not cover even the inflation rate, and the real value of your money will diminish if you keep it in a savings account for a long time. But then, a savings account is very liquid, and there are costs involved in that.
If you want to keep funds for a longer time, it’s better to switch over to a fixed deposit, which offers a much higher interest rate. Some banks offer a sweep-in facility where money above a certain limit in your savings account will be automatically transferred to a fixed deposit.
Most banks require you to keep a minimum balance in your savings account. However, there are no-frills accounts that enable you keep zero balance in your account.
In recent times, banks have differentiated their savings account offerings so that the savings bank account meaning seems to have undergone a change. There are zero-balance savings accounts that allow you keep your account clean as a whistle. A salary account enables an employer to disburse salaries to employees quickly and efficiently. And there are savings accounts that are meant especially
Benefits of savings account
Enables you to keep your cash safe.
Enables easy payments and receipts.
Idle cash earns interest.
Easy to operate.
Network of ATMs make it easier to withdraw cash.
Online banking enables easy payment of bills and fund transfer.
How to open a savings account
In recent years, banks have simplified the account opening process, so that it can be done quickly and efficiently. In fact, some banks even send their representatives over to your home, so that you can open a savings account without ever visiting the bank branch. Here’s what you need to open a savings bank account:
Proof of identity, like Aadhaar card or PAN card.
Proof of address, like passport, Aadhaar card, driving licence or voter card.
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