Difference Between Salary Account and Savings Account

You have just landed a new job and are eager to start managing your finances effectively. As you explore your banking options, you might come across terms like "Salary Account" and "Savings Account." While both accounts serve to hold your money, they have distinct features and purposes. Understanding the difference Between a Salary Account and a Savings Account will help you choose the right one for your needs.

Salary Account and Savings Account simplified 

Salary Account

This is a type of bank account opened by your employer in your name. As the name suggests, your salary will be automatically credited to your Salary Account every month. Your employer could be a corporation, startup, non-profit, or public sector organisation.

Savings Account

This is a type of bank account opened by individual consumers to help build savings and grow their net worth. Every consumer must have a Savings Account for efficient financial management. 

Difference between Salary Account and Savings Account

Here’s a snapshot of the key differences between a Salary Account and a Savings Account -  

1.Key purpose 

A Salary Account enables seamless, secure and timely transfer of your monthly income by your employer to you. On the other hand, opening a Savings Account allows you to make cash deposits regularly and grow your savings.

2. Account opening 

Your employer typically opens your Salary Account in your name. Hence, confirmation of employment is a key requirement to facilitate account opening. On the other hand, you have to open a Savings Account for yourself in your own name. 

Also Read: 3 steps to set up a salary account for your household help

3. Minimum balance 

Here’s another Salary Account and Savings Account difference. Typically, you need not maintain a minimum balance in your Salary Account. On the other hand, your Savings Account usually requires that you maintain a minimum amount of funds. You can open a Zero-Balance Savings Account; however, it usually comes with limited benefits.

Account conversion 

• If your employer permits it, you can convert an existing Savings Account into a Salary Account when joining a new job. When this happens, your account becomes a zero-balance account. You can, however, continue enjoying all perks, such as exclusive deals, reward programmes and insurance coverage.
• Suppose you shift from one employer to another, and both are associated with the same bank. With the approval of your new employer, your account could continue as the Salary Account for the new employer.
• If no salary is credited into your Salary Account for over three months, the account will automatically convert to a regular Savings Account. Thus, you will no longer enjoy the zero-balance advantage. Ensure you maintain the relevant fund balance to avoid penalties.

Also Read: 10 benefits of opening an Axis Bank Digital Savings Account

Similarities between Salary Account and Savings Account

While there are differences between Savings and Salary Accounts, there are also some similarities -

• You can deposit, withdraw and transfer money into and from your account as per your needs.
• You can operate a Debit Card and enjoy exclusive offers and rewards with card usage. 
• Based on the account, you may be eligible for a free Credit Card. 
• You can leverage your account to facilitate online shopping via Internet or mobile banking and the associated Debit and Credit Cards.
• Your account enables you to earn interest on the funds in your account. 
• You can leverage Internet / mobile banking to start investing and growing your passive income. 

Conclusion

Now that you are aware of the differences between a Salary Account and a Savings Account, you can choose the right one for you. Alternatively, you can also have both of these accounts for effective financial management.

Also Read: Benefits Of Keeping Salary And Savings Account Separate

Axis Bank offers a wide range of attractive Savings Account options to suit all consumer needs. Advantages include a seamless onboarding process, video KYC, online transactions, exclusive offers, a rewards programme, and perks such as insurance coverage and airport lounge access. So, open your account with Axis Bank and expedite your saving journey.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or 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. Please consult your financial advisor before making any financial decision