Opening a salary account is better than opening a normal savings account in many ways. People with salary accounts can get loans and use a number of free services. There are, however, some false beliefs about these stories. Find out everything you need to know about pay accounts.
What is a Salary Account?
Your salary is put into a salary account by your company every month. It’s a type of savings account. The main difference between salary accounts and other types of savings accounts is that salary accounts have extra features and perks.
These accounts also let you have no money in them at all without any fees. But this facility needs regular pay credits to work.
Top Features and Advantages
Here are some of the top features and benefits of a salary account:
Zero Balance Facility
You can maintain zero balance in your salary account without any penalty. This facility is, however, dependent on regular salary credits.
Free Services
Services like net banking, cheque book facility, SMS alerts, passbook, etc. come free with salary accounts. The free SMS alerts notify salary credits.
Easy Access to Loans
Banks can easily verify your income on salary accounts. This makes is easier to get personal loans, home loans, car loans, etc. The documented salary proof reduces risk for banks.
Overdraft Facility
You can get overdraft facilities on accounts active for 2+ years. The overdraft limit is up to 2 months of your basic pay. This allows withdrawals despite low account balance.
Misconceptions to Avoid
While salary accounts offer multiple advantages, some common misconceptions exist. Here are some things you should know:
Minimum Balance Rules
If there’s no salary credit for 3 straight months, banks convert salary accounts into regular savings accounts. This means minimum balance rules apply with penalties for non-compliance.
Loss of Free Services
Without regular salary credits for 3 months, you lose all the free services and facilities offered on salary accounts. This includes zero balance, free cheque book, free SMS alerts, etc.