Difference between Salary Account and Savings Account
Both Salary Account and Savings Account serve as important banking tools in India, they cater to different needs. Savings Accounts are suitable for individuals looking to save and manage personal funds, while Salary Accounts are specifically designed for employees to receive their salary payments. The accounts differ in terms of eligibility, balance requirements, fees, interest rates, and services offered. It's crucial for individuals to assess their financial requirements and choose the account that aligns with their needs and preferences. Summarized below is a comparison table between Savings Account and Salary Account in India:
Salary Account Vs Savings Account
| Categories | Salary Account | Savings Account |
|---|---|---|
| Purpose | Receiving salary payments | General banking needs and savings |
| Who can open | Requires employment with a corporate entity that has a salary account relationship with the bank | Can be opened by anyone irrespective of his/ her employment status |
| Salary Credits | Mandatory | Not mandatory |
| Usage | Primarily used for salary credits and associated banking activities | Can be used for personal and business transactions |
| Balance Requirements | Zero or low balance requirements | Varies across banks |
| Interest Rates | Mostly similar to savings accounts | Sometimes higher than salary accounts |
| Minimum Balance | Zero or low | Usually higher |
| Debit Card | Provided | Provided |
| Cheque Book | Provided | Provided |
| Withdrawal Limit | Usually higher limits | May have limitations |
| Special Offers | Exclusive offers for salary customers | Varies across banks |
| Account Conversion | Can be converted to savings account | No specific requirement |
| Additional Features | Online banking, salary credit | Online banking, bill payments, etc. |
| Fees & Charges | Often comes with reduced or waived fees for various services, including account maintenance, transactions, and more | May charge nominal fees for specific services such as ATM withdrawals, chequebook issuance, and account maintenance |
| Penalties | Non-maintenance charges, if applicable | Non-maintenance charges, if applicable |
While both Salary Account and Savings Account serve specific purposes, they differ in various aspects. Savings Accounts are designed for general banking needs and savings, offering higher interest rates and may have higher balance requirements. On the other hand, Salary Accounts are exclusively used to receive salary payments, with zero or low balance requirements. They typically have similar interest rates to savings accounts and may offer additional benefits like special offers and exclusive services for salary customers.
Similarities Between Salary Account and Savings Account
- Both accounts can be opened quickly and with minimum documentation
- Both accounts provide interest on deposits
- Both accounts provide Debit Card, Cheque book and Passbook facility
- Both accounts offer internet banking and mobile banking facilities
- Alert and notifications for transactions are sent in both the accounts
- Tax rebate under section 80TTA of the Income Tax Act can be availed in both the accounts
- One can deposit, withdraw and transfer funds into and from his/ her account as per need from both the accounts
Savings Accounts often require a minimum balance, while Salary Accounts may have no minimum balance requirement. Both types of accounts provide debit cards and chequebooks for convenient transactions. Withdrawal limits can vary, with Salary Accounts often allowing higher limits to cater to monthly salary transactions.
Conversion to a regular savings account is not necessary for a Salary Account as long as regular salary credits are available. However, if an individual no longer receives salary credits, the Salary Account may need to be converted subject to specific rules set by the bank.
It's important to note that penalties can be imposed by bank for non-maintenance of the minimum balance in both types of accounts, although the specifics can vary between banks.