Understanding the Difference between Salary Account and Savings Account
If you are considering opening a bank account, you may have heard of two common types, the salary account and savings account. While both accounts allow you to keep your money with a bank, there are significant differences between the two. Here is a brief overview of the features of each one, and how they work:
Salary Account
A salary account is a type of bank account that your employer can help you open. It is designed for receiving your salary, and allows you to access your funds whenever you need them. Some of the features of a salary account include:
- Some banks offer zero balance accounts, which means you don’t need any minimum balance to maintain the account.
- Your employer can deposit your salary directly into your salary account.
- You can use an ATM or a debit card to withdraw money or make purchases with the funds in your account.
- You may get some additional benefits such as free life insurance policy and credit card.
However, a salary account may come with some restrictions such as lower interest rates and charges applied for exceeding the withdrawal limit. It is important to check with your bank for the terms and conditions of your salary account.
Savings Account
A savings account, on the other hand, is a type of bank account where you can save a portion of your money and earn interest on the balance. This account is suitable for long-term savings and provides easy access to your money. Some of the features of a savings account include:
- You need to maintain a minimum balance in your account which will earn you interest.
- You can make deposits and withdrawals to your savings account as per your needs.
- You can use an ATM or a debit card to withdraw money or make purchases with the funds in your account.
- You may have an option to open a joint account with a family member or friend.
The savings account will typically offer better interest rates than a salary account. Thus, it is an ideal choice for people who wish to save their money for a longer time.
In Conclusion, the salary account and savings account cater to different needs. The salary account is suitable for salaried individuals who receive regular payments, while a savings account is for people who want to save money and earn interest on their deposit. Regardless of the type of account you choose, make sure you review the terms and conditions before opening an account to understand the fees, interest rates, and other terms applicable to your account.
Table difference between salary account and savings account
| Feature | Salary Account | Savings Account |
|---|---|---|
| Minimum Balance Requirement | Usually higher than savings account | Varies depending on the bank |
| Interest Rate | Lower than savings account | Higher than salary account |
| Salary Credit | Compulsory monthly salary credit | Not mandatory |
| Debit/Credit Card | Usually provided for free | Varies depending on the bank |
| Loan Facilities | Offered at lower interest rates | Available, but interest rates may be higher |
| Withdrawal Limit | Higher than savings account | Usually limited to a certain number of transactions per month |