In this modern era, people need at least one bank account to begin their savings journey. Banks in India provide a wide range of accounts where you can deposit funds, earn interest, pay taxes and much more. Regular savings and salary accounts are individuals’ most common bank accounts. However, you may want to know the differences between the two. So, in this article, we will discuss what a Salary and a Savings Account are and the differences between them.
So, What is a Salary account?
A Salary Account is a separate account into which your employer can deposit your monthly salary. In addition, companies and corporations frequently collaborate with banks to avail salary account facilities for their employees.
One of the biggest benefits of a salary account is that it is a zero-balance account, so there is no requirement to keep a minimum balance.
Some Indian banks provide different salary accounts based on the account holder’s salary slab. Even though the amount accumulated in the account is mostly not eligible for interest, the salary account provides many other benefits.
Still, some banks provide interest, and the Salary Account interest rate differs from bank to bank.
How do open a Salary Account Online?
A Salary Account can be opened with the employer’s help. Some banks also allow you to open a Salary Account online. So, you can easily receive your account number, chequebook, and debit card within a few days.
The following documents are required for Salary Account opening online:
- A properly completed application form to open the account
- Identity and address proof, such as a PAN Card, Aadhaar Card, Voter ID Card, Driver’s License, or Passport
- An identification card issued by the Central or State Government’s Public Sector Units (PSUs) and/or an NREGA Job Card
- Most recent passport-size photographs
- Letter of Appointment (as proof of employment with the company)
And, What is a Savings Account?
A Savings Account is a regular-use account where you can deposit funds to accumulate savings. This account can be used to manage your daily finances. There are different types of Savings Accounts. However, did you know that Salary Accounts are also a type of Savings Account?
The account holder may have to maintain an average minimum balance, depending on the type of savings account. Furthermore, the benefits provided by these accounts differ accordingly.
How to open a Savings Account online?
A zero-balance savings account can be opened by any individual who is a resident of India. A valid Aadhaar and PAN card are required to open a zero-balance account online. According to RBI regulations, banks can open savings accounts online using Aadhaar OTP verification.
Salary Account vs Savings Account
|Parameter||Salary Account||Savings Account|
|Meaning||Employers typically open salary accounts for their employees. This account is opened to credit employees’ monthly salaries in a lump sum.||Savings accounts are a basic financial service available to the general public. This account can be used to manage your daily finances. There are various types of savings accounts available.|
|Minimum Balance Requirement||You do not have to maintain a minimum balance in your salary account.||Depending upon the bank, a certain amount is required in the bank account.|
|Interest Rate||Most salary accounts do not offer interest. If they do, the Salary Account interest rate depends on your account type.||The interest rate of a savings account depends on the bank as well as the type of savings account it is.|
|Conversion||If the salary is not credited to the account for 3 months, the bank converts it into a regular savings account.||If your bank allows it, you can change your Savings Account to your Salary Account. However, this is possible only if your employer uses the same bank as you.|
|The account can be opened by||The employer can open a salary account. A company must have a relationship with a bank to open a salary account.||Any individual can open Savings Accounts.|
Although salary and savings accounts are considered similar, they are slightly different. For example, employers typically open salary accounts to credit salaries, whereas anyone can open savings accounts. Thus, people who change jobs frequently must understand the distinction between these two types of accounts to avoid financial difficulties.