When does a Salary Account get converted to a Savings Account?

[Abhilash Rathore]

Currently, Indian banks offer different types of accounts. A Salary Account is one of them. The primary purpose of this account is to allow employers to pay employees their monthly salaries. Salary Accounts also offer various benefits to salaried employees. However, such an account can get converted into a Savings Account.

Overview of Salary Accounts

A Salary Account is offered to salaried customers. It forms a convenient way for employers to pay the monthly salaries of their employees. An employer usually opens this account, and an individual can benefit from it by being employed by the employer. To open Salary Accounts for employees, an organisation should tie up with the bank.

While a Salary Account is a Savings Bank Account, they are different when thinking about Salary Accounts vs Savings Accounts. An employer opens a Salary Account to credit the salary of their employees every month. On the other hand, anyone can open a Savings Account to deposit and save money.

Benefits of Salary Accounts

The various advantages offered by Salary Account include:

• Employers utilise Salary Accounts to credit the monthly salaries of employees directly.
• Banks usually allow employees to set up automatic bill payments directly from their Salary Accounts. This ensures that their essential bills are paid on time.
• Typically, a Salary Account is a Zero-Balance Account. Hence, account holders need not maintain a specific amount in their account to avoid penalties. This zero-balance nature ensures salaried employees enjoy more flexibility when managing their funds.
• Employees also get access to a Debit Card and personalised chequebook with a Salary Account. They can use these to withdraw cash. Account holders can also utilise their Debit Cards to make offline and online payments.
• A Salary Account often provides employees access to a range of banking services, including Online Banking. This makes it convenient for Salary Account holders to manage their finances.
• Since banks might consider your Salary Account relationship with the bank as a positive factor, it could boost your eligibility for different Loans.

Conversion

If your salary stops being credited to your Salary Account, it does not close automatically. Instead, if your salary has not been credited to your account for three consecutive months, the bank usually converts your Salary Account into a Regular Savings Account.

Conclusion

A Salary Account is offered by banks specifically for employees to collect their salaries from their employers. Such an account makes it easy for employees to monitor their salaries and carry out other financial transactions. It also offers various benefits and services. However, if your salary stops being credited for a while, such an account gets converted into a Savings Account.