A savings account and a salary account are two of the most common types of bank accounts available to individuals. While both types of accounts provide similar features, there are significant differences between the two. Understanding these differences is important when choosing which type of account to open.

Savings accounts

Savings accounts are the most common type of bank account in India. They are designed to encourage savings by offering interest on the deposited amount. Anyone, including salaried and non-salaried individuals can open savings accounts. The key features of savings accounts are:

  • Interest rate: Savings accounts earn interest on the deposited amount and the interest rate is usually between 3%-5% per annum, depending on the bank.
  • Minimum balance: Savings accounts have a minimum balance requirement, which varies from bank to bank. Failing to maintain the minimum balance attracts a penalty fee.
  • Transaction limit: Savings accounts have a limit on the number of transactions that can be made per month. Any transaction beyond this limit may attract additional charges.
  • Debit card: Savings account holders are usually provided with a debit card that can be used to withdraw cash and make purchases.
  • Overdraft facility: Some banks offer an overdraft facility on savings accounts, which allows account holders to withdraw more than the available balance. However, this facility comes with a higher interest rate and fees.

Salary accounts

Salary accounts are a type of savings account that are offered to salaried individuals by their employers. The main purpose of a salary account is to credit the employee’s salary and provide a convenient mode of salary disbursement. The key features of salary accounts are:

  • Interest rate: Salary accounts also earn interest on the deposited amount, which is similar to savings accounts. However, the interest rate on salary accounts may be lower than that of savings accounts.
  • Minimum balance: Salary accounts may or may not have a minimum balance requirement. Some banks offer zero balance salary accounts to their customers.
  • Transaction limit: Salary accounts usually have a higher transaction limit than savings accounts. This is because they are used for salary disbursement and hence, have a higher volume of transactions.
  • Debit card: Salary account holders are also provided with a debit card that can be used to withdraw cash and make purchases.
  • Overdraft facility: Some banks offer an overdraft facility on salary accounts, which is similar to that of savings accounts.

Key differences between savings accounts and salary accounts

Savings accountSalary account
PurposeFor saving moneyFor salary disbursement to employees
Minimum BalanceRequired, amount varies from bank to bankMay or may not have a minimum balance requirement
Transaction LimitLimited per monthHigher than savings accounts
BenefitsMay offer loyalty rewards and other benefitsMay offer additional perks like free insurance or discounts on loans
EligibilityAnyone can open a savings accountOnly employees of a particular company can open a salary account
ClosureCan be closed at any timeTypically converted to a savings account when the account holder stops receiving salary


Both savings accounts and salary accounts have their own advantages and disadvantages. While savings accounts are suitable for anyone looking to save money and earn interest, salary accounts are specifically designed for salaried individuals. They offer the convenience of salary disbursement and have a higher transaction limit. However, it is important to carefully review the terms and conditions of each type of account before opening one.

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