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How different are Salary Accounts? Here are some features and benefits they offer!

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How different are Salary Accounts? Here are some features and benefits they offer!

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In the vast world of bank accounts that exist, a Salary Account is probably the one you'd identify with easily. It's essentially a Savings Account in which your employer deposits your salary. If you've worked for a few years now, you've probably had more than one salary account linked with your name.

While Salary Accounts have the features of a savings account, they come with benefits catered to just salaried employees. Wondering what these are? Continue reading to know more!

Defining a Salary Account

Salary accounts allow employers to pay their employees their salaries seamlessly. But apart from the convenience they come with, these accounts provide their account holders, i.e., employees, with other banking benefits. 

Salary accounts are also classified as interest-bearing accounts, they help their account holders earn interest on the balance they maintain within their account. This interest is ordinarily calculated daily and is deposited into one’s account each quarter. 

Examining Salary Account Benefits

There are several ways in which salary accounts benefit the employers, their employees and the banks where these accounts are held. Some of these have been discussed below. 

a. Employee Benefits

Apart from a debit card and a chequebook to start with, most salary accounts offer the following (if not more) benefits -

b. Zero balance accounts

Zero balance account holders needn’t worry about maintaining a certain balance in their accounts, nor do they have to risk facing any penalty for not maintaining the balance. Employees that hold such accounts can take advantage of the flexibility they provide.

c. Online Fund Transfers

With a salary account, account holders can send and receive funds online from anywhere in the world. Cumbersome cash withdrawals and cheque deposits are therefore not needed when transferring funds. Most banks also provide account holders with phone banking facilities that make it possible to manage transactions from their mobiles. 

d. Invest on the go

Account holders can invest in government bonds, mutual funds, insurance products, and more. Further, if an account holder wishes, a Demat account can be linked to their salary account such that they can make stock investments and trade hassle-free. 

e. Priority on loans

Salary account holders can access several loans from their banks. Further, if you already have a salary account with a bank, the documentation needed to avail a loan with the same bank is reduced, making the process faster and simpler. Existing account holders tend to enjoy more competitive interest rates in comparison to those that don’t hold accounts with the concerned bank.

Exploring Additional Salary Account Features

While salary accounts allow monthly salaries to be credited, they also allow account holders to carry out the following tasks.

a. Accountholders can deposit cash and cheques into their salary account. In case large sums of cash are deposited, a declaration of the source is required.

b. Money can be transferred from and to a salary account.

c. Account-holders can withdraw their money from this account at any point in time.

Key Aspects to Consider When Selecting a Salary Account 

A large number of companies open salary accounts on behalf of their employees. That said, a few companies provide their employees with the right to choose the bank where they’d like to open their salary accounts. If the latter applies to you, you should consider the following factors before selecting.

a. Assess the Bank’s Reputation

Consider the bank’s reputation and select a reputed bank so that your money can be safe.

b. Keep it digital-first

Make it a point to understand whether or not the bank you opt for has seamless digital banking services. Digital banking is the need of the hour. With the world around you going digital, this isn't something you want to miss on.

c. Opt for great customer support

Take a look at the bank’s customer support and opt for one where the customer service is good. You never know when you might need help and having a relationship manager and an active customer support can go a long way.

Account Conversion

Suppose there is a situation where your salary isn’t credited into your salary account for three consecutive months. In that case, your account will be converted to a regular savings account. This would mean that the services and benefits enjoyed would also convert.

On the flip side, if you join a company that holds salary accounts with a bank where you already hold a savings account, then the bank can convert your existing savings account into a salary account after obtaining a letter from the company.

Final Thoughts

Salary accounts might not be a completely different ball game from savings accounts, but their benefits can work out well for you on the long term. It's best to do your research before opting for a salary account, if you have the option. If you wish to use your salary account for everything from investing to saving, buying and more, Fi's salary account could be a game changer for you. With great rewards and a super neat app that simplifies your finances, this could be all that you need to take your next big financial steps. Check out more about Fi here.

Fi offers its users various financial services to simplify finance as they save. You can visit the website or download the app to know more. 

Frequently Asked Questions

1. What are the benefits of a salary account over a savings account?

Consider the following benefits that help set apart salary accounts from savings accounts.

A salary account benefits the holder as it doesn’t require a minimum balance to be maintained, while savings accounts might require account holders to maintain a minimum balance.

Salary account holders get to enjoy several benefits that aren’t linked to any fees. In contrast, benefits offered under savings accounts are fewer and tend to be linked to fees. 

2. Does a salary account have a minimum balance? 

There is no minimum balance linked to salary accounts. Owing to this, they are called zero balance accounts. 

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