Salary Account vs Savings Account: What Makes Them Different?

Many people often get confused between a salary account and a savings account. Although there are many similarities, they function as two entirely different accounts that serve different purposes.

In order to understand salary account vs savings account, we first need to gain a thorough understanding of what they are and how they function! Let’s get started.

What is a Salary Account?

A salary account is an employer-operated account where your employer credits your monthly salary. The employer has tie-ups with banks where they can open an account for their employees.

What makes salary accounts so attractive is that they are zero-balance accounts. This means that even if the account is empty, the account holder won’t be charged any maintenance fees.

What is a Savings Account?

A savings account is anyone’s first step towards financial independence. It is one of the basic financial services that banks offer to everyone. Savings accounts are interest-bearing deposit accounts that provide every saver a set interest rate depending on different banks.

Earlier, these accounts used to pay only a small amount of interest, but over time, there has been a change. With the onset of digitalisation, neobanks have been introduced to the public. These banks offer digital savings accounts with some of the market’s highest interest rates. Freo Save’s digital savings account is one such example!

Freo Savings offers one of the highest interest rates – up to 7%! With a zero-balance requirement, spend the last penny of your account without worrying about maintenance fees.

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Difference Between Saving Account And Salary Account

Despite holding similarities, both of these accounts have points of difference that are highlighted in the table below:

Savings Account

Salary Account


Anyone can open with the purpose of saving their money for the long term.

Employers open this account for their employees to credit their salaries.

Minimum Balance Requirement

 You have the option to open zero-balance savings accounts.

All salary accounts are zero balance. Therefore, you don’t have to maintain a minimum amount to avoid maintenance fees.


If you already have a savings account with the bank your company is tied up with, you can request the employer to convert it into a salary account.

If the salary is not credited to the account for more than three months, the account is converted into a regular savings account.

Interest Rates

Different interest rates are available depending on the bank and the types of savings accounts.

Most salary accounts are not interest-bearing, but they differ from bank to bank.

Who Can Open

Anyone who wishes to save or start their financial journey can open an account.

Only an employer can open a salary account for their employees.

Account Holder

You can open it jointly with other people.


You cannot open it jointly with anyone else.


Similarities Between Salary Account and Savings Account

Despite being so different, there are some similarities between a salary and a savings account. Although they are used for different purposes, there are certain similar features like:

  • Quick and simple account opening formalities
  • Net and phone banking options
  • Void of any charges for using other ATMs
  • Allows electronic fund transfer – IMPS/NEFT/RTGS
  • 24×7 banking services
  • Similar tax implications
  • Set automated bill payments
  • Get SMS alerts of transactions on your phone
  • Entitled to get a credit card
  • All branch services available – withdrawal, deposit, etc.
  • Collect or stop cheque payments
  • Similar passbook issuing and printing processes

Is a Savings Account Important?

Yes, absolutely! Even if you have a salary account, you still need a savings account. If savings is on the top of your mind, opening a high-interest rate savings account is an ideal choice. So, get started today!

Earn interest on the funds you save by opening a zero-balance Digital savings account with Freo!

  • Enjoy up to a 7% interest rate
  • Get a 100% digital experience
  • Avoid maintenance with a zero-balance account
  • Completely secured with Equitas SFB’s safe banking platform
  • Quick access to shopping, credit, and card products
  • Available in vernacular
  • Get ₹5 Lakh insurance on deposits