Both salary and savings account may offer the same benefits. However, they do have some differences that can be identified by comparing some of their features.
Here are a few distinguishing features:
Savings bank account
When managing finances, keeping two separate accounts could seem like too much effort. But there are some advantages of keeping both accounts separate.
Let’s look at the benefits of having a separate savings and salary account:
A separate salary and savings account can help streamline your budget. It can make it easy to track expenses. For example, by using a single account to pay utility bills, you can track all your bills via the respective account. Instead, if you make all your transactions from one account, it might get difficult to track the money at the end of the month. Having separate accounts could help you better manage your money.
With a separate salary and savings account, you can set a goal for savings each month. Based on the target, you could consistently transfer money from your salary account to your savings account every month. This will help you get a picture of how much you’re saving. In case of emergencies, you can directly check your savings account balance to know how much you can afford to spend. Without a second account, you would have to take the additional efforts of calculating the instant liquidity you could afford from your single account.
Having a separate account for savings could also help you keep your regular withdrawals restricted to your salary account. This would help you grow your funds in your savings account.
Increased rewards and benefits
These days, salary accounts, by default, come with a host of facilities such as mobile banking, Netbanking, ATM facility, online banking, and more. A savings account will also offer these facilities. You would, therefore, have access to the same facilities on two accounts. Discounts and rewards that come with a debit card or netbanking could be enjoyed on both your accounts. Therefore, by using the features correctly, you could double the benefits.
Higher interest/profit rate
You could benefit from the difference in interest rates on your savings or salary account. Depending on the banks where you have your account, you could benefit from a higher interest rate on one of the accounts. Shifting your money to the account with a higher interest rate would help you earn more on it. One bank could also offer different interest rates for a salary and savings account. You could open a second account in the same bank and then transfer money to the account with a higher interest rate.
Money managed well is an important part of growing your wealth and keeping it secure. Keep your savings and salary account separate to reap more benefits and manage your finances better.