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What Changes Occur When You Convert Your Salary Account Into Savings Account?
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When an individual joins a company or organization, a salary account is generated for them. The salary account is opened at the bank that the company is associated with, for the purpose of transferring employee salary every month. Thus, while a salary account is a type of a savings account where one receives their salary, a savings account is generally opened by an individual on their own, at the bank of their choice and at any time they want. A person can deposit money in their savings account whenever they want, unlike a salary account where the salary is deposited by the employer each month.
There are quite a few advantages of a salary account. They include-
1. This type of an account can be marinated at zero balance. A minimum account balance is not necessary.
2. A salary account offers its holder, draft as well as pay order facility for free.
3. Debits cards for this type of an account are also offered for free, that is, no issuance fees or annual fees are taken.
In case an individual plans to switch a job, or leave his current job the salary account then requires to be closed. This is primarily because the agreement between the bank and the company ceases to exist. But a number of banks offer individuals the choice of converting their salary account to a savings account.
In case you choose to convert your salary account into a savings account, you should bear in mind that you will not enjoy the previous benefits that your salary account offered, a minimum balance will now have to be maintained, drafts and pay orders will be charged and you may have to pay an annual fee for your debit card.
Thus, before changing a salary account into a savings account, consider the following-
1. Will the savings account be useful?
If you already have another savings account, converting your salary account into a savings account will not be of much help. But, if this is not the case then you can convert it. A savings account will encourage you to save money from time to time.
2. New job, new salary account- is it necessary?
Find out if the new company is associated with the same bank as your previous company, if this is the case, you can make arrangements to use the same salary account without converting it into a savings account.
3. location of the bank branch
Make sure that the bank branch is located near you for convenience.
A salary account should be converted into a savings account only if the account will be of use later on, otherwise one can easily close it.
Author Bio:- Neha Sharma is a finance student who loves to write in her free time. She has spent considerable time researching about the EMI calculator and why is it important to calculate the EMI. Through her work, she provides valuable information on what changes when a salary account is converted into a savings account.
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