Difference Between Salary and Savings Account

Personal finance includes managing money, which entails using a variety of financial terms and tools. Salary and savings accounts are two concepts that are frequently used in the world of personal finance. Despite their apparent similarity, they are separate ideas with different financial management objectives. In this post, we’ll examine the main distinctions between a salary and a savings account and discuss how each affects how money is managed by an individual.

What is Savings Account?

A savings account is a type of bank account for the public where you can deposit money and earn interest on your balance. It is ideal for people who may not be salaried and wish to generate interest on their deposit account. Savings accounts are typically used for long-term storage of money, as they typically have restrictions on the number of withdrawals or transfers you can make in a given period of time.

What is Salary Account?

Those who receive a regular salary or another form of income from their employer may open a salary account. These accounts often offer a variety of advantages and features, including zero-balance availability, to meet the specialised banking requirements of salaried individuals.

Difference Between Salary and Savings Account 

There are some key differences between both these account types. Let’s discuss this in detail. 


Organizations open salary account for their employees for the purpose of crediting salaries. Whereas a savings account can be opened by anybody with an Aadhar card for the purpose of saving money with the bank. 

Minimum Balance Requirement: 

In a salary account, there is no minimum balance criteria. You can continue using the account at zero balance. However, a savings account requires the account holder to maintain a certain balance. 

Account Conversion: 

When your salary account is not credited for a few months (usually three months), it is automatically converted into a regular savings account. After this, you may require to maintain some balance to keep the account active. 

On the other hand, you can convert a savings account into a salary account depending on the bank. For example, if you change a job and your new organization uses the bank of your savings account to credit employees’ salaries, then the conversion may be simple and seamless. 

Interest Rates: 

The interest rates offered in both savings and salary accounts are the same.

Account Holder: 

An individual can open a corporate salary account if their organization has a salary relationship with the bank. A salary account is also usually opened by the employer. Whereas, anyone can open a savings account online or by visiting a bank. 

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Similarities Between Savings and Salary Accounts

Here are the top features common to both savings and salary accounts: 

  • Both the account types offer the passbook facility
  • Both account types offer the benefit of net banking
  • Both salary and savings accounts have alerts and notifications for transactions
  • No charges are applicable for using the ATMs of each account
  • Both accounts offer electronic funds transfer facility
  • Both account types also offer the phone banking facility with no charges or account fees for online transactions
  • 24/7 banking facilities are available in both accounts
  • Both accounts have a quick account opening process without much hassle

Is a Savings Account Important?

A reliable savings account gives you a secure location to save your money while it also generates interest. You may ensure that you have money set aside for your savings goals by creating an account with high rates and low fees and by making frequent deposits.

Can I have a savings account without a salary?

You can have a savings account even if you don’t get paid. Regardless of their source of income, anyone who wishes to save money can create a savings account.

Can I use my savings account as a salary account?

Although they may have limitations on withdrawals and transfers and are typically used for preserving money, savings accounts can be utilized to receive salary payments.

What are the benefits of having a savings account?

There are several advantages of having a savings account, including:
Safety: Savings accounts normally offer a secure location to keep your money because they are insured by the government up to a specified amount per depositor per financial institution.
Interest accrual: Savings accounts have the potential to earn interest on the money deposited, enabling your savings to increase over time.
Convenience: With possibilities for Internet banking, ATM withdrawals, and other transactional services, savings accounts offer a practical method to store and access your money.
Goal-oriented savings: Savings accounts can be used to save aside money for certain short- or long-term financial objectives, such as retirement, vacations, emergency cash, and educational costs.

Can I withdraw money from my salary account?

Yes, you can withdraw money depending on the features and limitations of your salary account.

How much money should I keep in my savings account?

Your unique financial status, financial goals, and level of risk tolerance will determine how much money you should retain in your savings account. It is generally advised to keep an emergency fund in a savings account that covers 3-6 months of living expenses in case of unanticipated circumstances like job loss, medical issues, or sudden expenses.

Are there any fees associated with savings accounts or salary accounts?

Some features or services related to savings accounts or salary accounts, such as monthly maintenance costs, transaction fees, ATM fees, overdraft fees, or minimum balance requirements, may incur expenses from financial institutions. It’s crucial to read the terms and conditions of your pay or savings account and be aware of any potential costs.

Can I have multiple savings accounts or salary accounts?

Yes, you are permitted to maintain numerous salary or savings accounts at different financial institutions or even at the same institution. Having numerous accounts may help you better manage your spending and savings, set aside money for various objectives or uses, or take use of various features and advantages that various accounts have to offer.

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