#DecodeBanking > How is a SALARY ACCOUNT different from a SAVINGS ACCOUNT?

Earlier on in my career, I always thought a Salary Account and a Savings account are one and the same thing. Ended up checking with a few friends and family, and surprisingly, most of them assumed the same too. This is not true. There are various differences between both the accounts and here I am, decoding them for you.

Basically, a Salary Account is opened on request of a corporate organisation for their employees. So, an employee gets a personal Salary Account where salary is credited every month.

A Savings Account can be opened by anyone from the public with an Aadhaar Card whether salaried or not. Typically, people who are not salaried open Savings Account to manage their finances on a daily basis and to get an interest-generating deposit account.

A Salary account has no minimum balance required whereas for a Savings Account, your bank expects you to maintain a certain amount of minimum balance per month. A corporate Salary Account can be opened by an individual whose company has a salary relationship with the bank. A Salary Account is created by the employer. A Saving Account can be created by the individual.

When the salary has not been credited to your Salary Account for quite some time (usually three months) then the bank will convert your Salary Account into a regular Savings Account which will require maintaining a minimum balance. It depends on the bank and you can apply to convert your Savings Account to your Salary Account. This is possible when you change your job, and your organization happens to have a banking relationship with the same bank for its employees’ Salary Accounts.

You need to be aware of the above differences when converting from a Salary Account into a Savings Account, or if you frequently switch jobs. When you have not closed down or converted any previous Salary Account after switching organization, then make sure to do so, or banks will charge a maintenance fee or a penalty on not maintaining a minimum balance to the converted Savings Accounts.

Earlier SBI was my salary account. Then last year SBI announced that any SBI account doesn’t require minimum average balance to be maintained anymore. Which means that all SBI accounts are now zero balance accounts. I then, made my HDFC account as salary account to make it a zero balance account. Both SBI and HDFC are now zero balance accounts.

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