Importance Of Bank Account For A Salaried Person
Once you join a company, your employer will provide you with a new bank account. These are generally referred to as “salary accounts.” Salary accounts are opened to conveniently pay the employee’s salary. With a salary account, the whole payment process becomes seamless for the employer.
An employer must tie up with a bank to open salary accounts for their employees. The employer deposits a fixed amount of money in the bank account every month as salary.
Essentially, these are savings accounts that cater solely to salaried employees. Apart from making the process simpler, salary accounts come with many additional benefits.
Salary Account Benefits
The features of a salary account can differ from bank to bank. However, there are a few advantages that usually remain the same. Let us have a look at the benefits of a salary account.
- Zero Balance Account
A salary account is generally a zero-balance account. Meaning, you don’t need to compulsorily maintain a minimum balance. This saves you from the penalties that are incurred when you are unable to maintain a certain balance. A zero balance account gives people the freedom to manage their finances more freely.
- Online Fund Transfer
Salary account holders get the benefit of transferring and receiving funds online. This eliminates the need for cheque deposits and cash withdrawals. Many banks even provide their customers with phone banking services. This gives you access to many services from the comfort of your home.
- Debit Card and Cheque Book
Banks provide salary account holders with personalised chequebooks for cheque payments. You are also given an ATM card that enables you to withdraw money and make online and offline debit card payments through it.
- Easy access to loans
A need for a loan can occur at any time. Banks provide salary account holders with immediate access to several types of loans. Not just that, but their paperwork and documentation are also reduced. This makes the whole process quick and simple. Banks also provide existing account holders with more competitive interest rates while availing of a loan.
This facility depends on the type of company you are in and on your credit score.
- Investment Services
As the holder of a salary account, you can invest in mutual funds, government bonds, insurance products, and other types of financial products. You can also link your Demat account with your salary account.
- Utility Payments
You can use your salary account for the payment of utilities like electricity bills, water bills, internet recharge, and other expenses.
Difference Between Salary Account and Savings Account
A salary account is created by the employer in a tie-up with a bank for their employees. The main purpose is to transfer the salaries of the employees in a hassle-free manner. A savings account is created by the individual to keep their savings in one place and earn interest on it. It promotes savings for people.
You are eligible for a salary account once you are employed by a company and start receiving a salary. On the other hand, a savings account can be opened after you turn 18. Some banks provide savings accounts for minors as well.
The salary account is a zero-balance account. You don’t have to maintain a minimum balance. While savings accounts require you to maintain a minimum balance. Failing to do so can result in penalties.
A salary account turns into a savings account if the salary has not been credited for three months. You can also convert your savings account into a salary account if you meet the required guidelines and norms of the bank.
Conclusion
Salary accounts are opened by the employer for the employees. Its main purpose is to transfer the employee’s monthly salary to their account. Salary accounts come with many benefits. From no requirement to maintain a minimum balance to online fund transfers and easy access to loans. They are a type of savings account but with additional benefits. You can convert your salary account to a savings account and vice versa.
For more blogs on finance and your other finance-related queries, reach out to us at Piramal Finance. Our experts will guide you through your financial journey and make it simpler.
FAQs
Q1. Can a salary account have joint applicants?
A1. Yes, the salary account can be opened with the nominee or beneficiary. You will be asked to submit some documents to do so. Check with your bank for additional guidelines.
Q2. Do you get interest for the amount maintained in the salary account?
A2. Some banks offer interest on the amount maintained in a salary account. But this may differ from bank to bank. Some banks even have more than one type of salary account.