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Handbook to know your Salary Account better

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Handbook to know your Salary Account better

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“Twelve thousand, four hundred and thirty-nine”, declared the clerk as he explained to me the salary structure. It was my first ever job, and the thought of getting so much money gave me a high. Just when my thoughts made me smile, the clerk told me to fill out an application form to open my salary account. “Salary account?” But I already had a bank account, did I really need another one?

Thankfully, the kind clerk answered all my questions like what is a salary account, how is it different from other types of accounts. And now, years later here I am, spreading the knowledge. 

Let’s discuss what a salary account is, the various features of the salary account in detail, and just about everything you need to know about it.

What Is a Salary Account?

A Salary account, by definition, is a form of savings account through which corporations or companies pay their employees salary each month.  It not only simplifies things for the company but also provides other benefits to the employee.

Who Can Open A Salary Account?

A company or employer generally collaborates with a bank to open salary accounts for its employees. Every month, the salary amount is deposited in bulk into all accounts. If you do not have an account with the bank with whom your employer has a partnership, your employer can help you get one.

A salary account cannot be opened by a person individually; it has to be a partnership between a company and a bank. Here are a few things to remember when you're opening your salary account.

What Benefits are Offered through a Salary Account?

A salary account provides a lot of added benefits over a savings account since it is more profitable for the bank because it receives a certain amount of money every month. As a result, it has a consistent supply of CASA, which bodes well for the bank's operations.

The benefits of a salary account may differ from one bank to the next. There are multiple types salary accounts, each with their own features and advantages, but for now, let's have a top-level look at common benefits here.

Zero Balance Account

A salary account typically is a zero balance account. Account-holders do not have to worry about maintaining a certain balance or incurring a penalty. Because of this salaried employees have more flexibility in managing their money.

Debit/ Credit Card and Personalized Cheque Books

Employees are also given an ATM card, which they can use to withdraw cash from ATMs and make online or offline card payments. Account-holders are also given personalised cheque books that they can use for cheque payments.

Net Banking and Mobile Banking

With a salary account, account holders can send and receive payments online from anywhere in the world. This eliminates the requirement for cash withdrawals or cheque deposits to complete the fund transfer. Some banks also provide phone banking services, allowing customers to manage their accounts from the comfort of their own homes.

Easy Loan Access

Salary account holders can also get fast access to various loans from banks. Having your salary account in the same bank as your bank account makes the paperwork smoother and faster, no matter what type of loan you're searching for a personal loan, a vehicle loan, or a home loan. Even the interest rate for existing account holders is often more competitive.

Simplified Investment Services

A salary bank account allows account users to invest in mutual funds, insurance products, government bonds, and more. A Demat account can be linked to a salary account for stock investing and trading.

Individuals can use the salary account to deposit cash or cheques, withdraw funds, or transfer funds to and from the account

Difference Between Salary Account And Savings Account

Although a salary account is a form of savings account, there are some differences between the two. Let's have a broad look at some of them:

Conversion of Accounts

If your salary hasn't been credited to your salary account for a particular amount of time, typically three months, the bank will convert it to a standard savings account with a minimum balance requirement. You can, however, convert your savings account to a salary account if your bank allows it. If you switch jobs and your new employer has a banking arrangement with the same bank for its workers' salary accounts, it would be feasible to keep the same salary account.

How to Choose A Good Bank For Salary Account?

Though your employer selects the bank where you would have to open a salary account, here are the things that indicate to you which is a good bank for a salary account -

Network of ATMs

Try opting for a bank where you can get free access to other banks' ATMs throughout India. You can prefer going for a bank with a wider network of branch offices and ATMs.

Rate of interest

You must look for a bank that offers an interest rate on a salary account. On salary accounts, several banks provide extremely high-interest rates.


A few banks provide extra reward points and various other benefits to employees who have a salary account.

Credit cards

It is helpful if a debit card or, in certain cases, a credit card comes with a salary account. This implies you can withdraw cash from ATMs and pay using your card instead of cash at various locations and stores.


With the risk of online fraud, it is critical to assess banks in terms of security and take all cyber-security measures to protect your data and money online.

Customer Service

It is recommended that you look into your bank's customer service before opting for the bank. It is always better to opt for a bank that offers 24x7 service and has a strong turnaround time in resolving queries for its customers. 

Benefits of Keeping Your Salary and Savings Account Separate 

One of the most tried and tested money habits is to keep one’s salary account and saving account separately. Certain benefits are directly related to keeping salary and savings accounts separate. They are as follows-

1. Keeps Your Finances Maintained

Keeping track of your money is easier if you have a separate salary account and a savings account. You may keep your finances organised by paying your fixed and variable costs from a savings account. Banks now provide a variety of services to facilitate financial transactions, including online banking, mobile banking, and UPI.

You can track your costs better if you pay your electricity bills and insurance premiums from the same account. Managing all of your costs from your salary account may make it tough to keep track of them.

2. Helps You Earn More Interest

Although most banks charge the same interest rate on salary and savings accounts, some institutions charge a significantly lower rate on salary accounts. In that situation, you should transfer your cash to a high-interest savings account to maximise your interest earnings. Further, if you have any savings left after your monthly costs and investments are accounted for, investing it is a good idea. This will allow you to earn more interest than a savings account while also providing liquidity. The Jars feature that Fi offers is another tool that you can use to grow your money for different goals.

3. Helps You in Keeping your Savings Intact

Having a separate account for expenses will help you understand where your money is going because it allows you to track your spending. Furthermore, by creating a monthly budget, you will be able to transfer only the necessary amount from your salary account to your savings account, which will help you meet your monthly expenses. It will limit your salary account withdrawals, and the sum in your salary account will encourage you to save more each month.

You can instantly check your balance and transfer funds from your salary account using any digital channel in case of an emergency.

4. Make the Most of Extra Benefits and Rewards

As previously stated, the salary account offers a variety of benefits and cashback on online transactions made using debit and credit cards, mobile banking, internet banking, UPI, and other methods. Your pay and savings accounts will certainly give different incentives and advantages for different types of transactions, especially if these accounts are with two separate banks.

If your salary account debit card offers 5% cash back at a specific electronics retailer, your savings account may only offer a 1% reward on grocery shopping. You can save a significant amount of money each month by making an informed decision.

Summing It Up

Although salary accounts are a type of savings account, they have several features and perks that make them more beneficial than savings accounts. Fi, for instance, offers an exclusive range of benefits on salary accounts. 

Frequently Asked Questions

1. What is the benefit of a salary account?

The advantages offered by a salary account may differ from one bank to the next. Even within a single bank, numerous types of salary accounts may exist, each with its own set of features. However, salary accounts, in general, have certain common benefits, such as - Debit Cards, Phone Banking, NetBanking, Zero Minimum Balance, Online Fund Transfer, Utility Bill Payments, Demat Account/services, Free Passbook/ Cheque book/E-statements, Loan conveniences, Credit Card offers, and so on.

Yes, you can use the salary account and deposit cash into it at any time, but if the monthly number of 'over-the-counter transactions' for the account exceeds a certain threshold, you may be charged a small fee. Depositing cheques, cash, and withdrawing cash are all examples of over-the-counter transactions.

2. Can I deposit cash in the salary account?

Yes, you can deposit cash in your salary account. This will require you to visit the nearest branch of your bank and fill out a form and submit it to the cashier with the amount you want to deposit.

3. Can I use my existing Salary Account if I have changed employers?

Yes, but in that case, you will need to visit the nearest branch with a letter or an e-mail sent from the official Company email ID if an agreement exists. Your full name and the account number should be included in the letter/ email, as well as a statement that you have joined the organisation.

4. Can a Salary Account have a joint applicant?

Yes, a parent, spouse, sibling, or child can apply for an account as a joint applicant. In that case, a valid photo ID and proof of address of the joint application will be required.

5. What is the  minimum balance required for a salary account?

In most cases, there is no minimum balance requirement for salary accounts.

6. Is it safe to keep your money in a salary account?

Yes. keeping money in a salary account is safe and secure. The account can be used for all monthly expenses as well as savings.

7. Is there any interest applicable to the savings in the salary account?

Since the salary account is used by the company to credit the employees' salaries, there is no interest charged on the funds held in the account.

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