Salary vs savings account: Here are nine differences

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Many of us have a salary account but we tend to ignore many of its features. How many of us have ever tried to take note of the differences between a salary and a savings account? From minimum balance to interest rates, check out nine differences between the two.

Minimum balance

Every commercial bank makes it mandatory for its customers to maintain a minimum average monthly balance. Else, the customer is charged a penalty. But for a salary account, the minimum balance rule is not applicable.

Eligibility criteria

Any individual with proper documentation can open a savings account. On the other hand, a salaried person from an organisation only is entitled to hold a salary account.

A savings account can be opened by a person, but a salary account can only be opened by a company in the name of an individual.

Zero balance

Each and every salary account is a zero-balance account. Except Jan Dhan accounts and some special no-frill accounts, one has to maintain a minimum balance in a savings account.

Interest 

Generally, all savings accounts give interest that varies between 2.5% and 6.5% depending on the amount and the rule of the bank.

But the interest of a salary account depends upon the character of the account. A basic salary account usually does not give interest, but premium salary accounts give the same interest rate as a savings account.

Overdraft facility

Overdraft facility is not available for normal savings accounts, but for high net-worth savings account some banks offer this facility.

For salary accounts that are more than two years old, one can get OD facility up to the sum of two months’ salary instantly.

Free ATM offers

Leading PSBs and private players like ICICI Bank, Axis, HDFC offer unlimited ATM transactions to some premium salary account holders in a month, whereas a few banks such as RBL, Citi, Yes offer free unlimited ATM transaction to customers.

For most of us, there is a cap of five free home branch ATM transactions and three non-home ATM transactions a month. Beyond this, a charge of Rs 20 plus GST would be levied per transaction.

Loan facility

Salary account holders always get special offers regarding personal loans. Pre-approved personal loans are frequently bundled with salary accounts. Salary account holders are likely to be offered home and car loans with special offers and low interest rates than the savings accounts.

But usually a savings account doesn’t make the holder eligible for personal loan or any type of loan.

Transfer of account

If you change your job, you can change the character of a salary account. You can make it a savings account and just inform the bank branch. If your salary is not credited for three consecutive months, the salary account turns into a savings account.

But to make a savings account into a salary account, your employer needs to send an NOC. Unless your employer sends a request, a savings account can never be turned into a salary account.

Multiple freebies

Leading banks generally offer multiple facilities to its salary account holders, which are not applicable for the savings account holders.

Offers like free ATM-cum-debit card, additional ATM card for the joint account holder, free multicity cheques, 25% off on locker charges, free demat account, complimentary accident and life cover up to Rs 30 lakh, free airport lounge access etc are clubbed with a salary account depending upon the category.