Wednesday, Oct 04, 2023

How Do Salary And Regular Savings Accounts Compare

Outlook Money 

How Do Salary And Regular Savings Accounts Compare

Are you confused whether you should have a salary account along with a savings account? Learn about the benefits of a salary account to see how it works for you

If you are new in the job, just fresh out of college, you might recall your employer asking you to open a salary account with the bank with which they have a corporate account. Accordingly, an official from the bank might have paid a visit to your office for the necessary paperwork to open a salary account for you.

Chances are that you might have also pondered that since you already have a savings account, what’s the point in having a separate salary account?

For a start, a salary account is a type of savings account where the employer deposits your salary, a fixed amount, every month. It is generally available to employees of businesses that have a tie-up with a bank. Hence, an individual typically cannot open a salary account independently.

Some companies also allow you to provide a regular savings account for receiving salary. But salary accounts can offer you some benefits.


Here are some benefits typically available with a salary account, which are otherwise not available with a regular savings account.

Minimum Balance Requirement: A salary account typically does not require one to maintain a minimum balance, but that is not the case with a savings account. The bank usually requires the accountholder to maintain at least a certain amount of balance in a regular or traditional savings account. Additionally, some banks also offer a zero balance savings account with no minimum balance requirement.

Maximising Rewards: Having a salary account and a traditional savings account will allow you to enjoy different reward points with each of the two debit cards. For instance, you may get cashback on lifestyle products with your salary account card and rewards on electronic products with your savings account card.

Some banks also offer additional benefits like access to airport lounges, or discounts at partner restaurant which can also vary with the type of card you hold. By combined use of both cards wisely, you can maximise your reward benefits.

ATM Transactions: Banks may provide free ATM transactions for both salary and savings account holders, which means you don’t have to worry about fees or limits on monthly transactions till a particular limit. Some banks offer a marginally higher daily ATM withdrawal limit on salary accounts. Nevertheless, this also depends on the type of account you hold, as banks offer a number of products under both the savings and salary account categories.

Offers on personal loans: Special offers on personal, housing and car loans are also available on a salary account, and you might also get a pre-approved loan facility on your salary account.

For instance, State Bank of India (SBI) promises personal loans up to Rs. 30 lakh with quick approval and instant disbursal with minimal documentation, if you have a salary account with them. HDFC Bank offers insurance and preferential pricing on various loans with its premium salary account.

Overdraft Facility: Both salary accounts and savings accounts offer overdraft facilities, but the rates typically vary.

For instance, ICICI Bank offers instant online overdraft facility against salary account with minimal documentation. The rate charged for ICICI Bank’s insta OD Savings account is 17 per cent per annum according to bank website.

On the other hand, FlexiCash is a facility offered to selected ICICI Bank Salary Account customers, with no documents required. The rate of interest is 12-14 per cent per annum.

Free Services: Reserve Bank of India (RBI) had stated that from January 1, 2020, no banks shall levy any charges from their savings account holders on online fund transfers done through NEFT. Many banks also offer the Immediate Payment Service (IMPS) facility on salary accounts. Banks also allow salary account holders to open free trading account. Salary account holders are also eligible for personal accident insurance for which the coverage varies with each bank.

Better Financial Discipline: If you have a salary account in addition to your savings account, then you can transfer a specific portion of your salary to savings account and pay bills directly from your salary account. This will help you better monitor your finances, budget it, and also reach your financial goals.


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