When and how should you convert a Savings Account into a Salary Account?

A Savings Account and a Salary Account are unique products. However, you can convert one to the other conveniently.

A Salary Account helps employers pay salaries to their employees easily. It is a zero-balance account that banks open upon the request of organizations like companies, institutions, and. You can also open a high-interest Savings Account with the bank of your choice and deposit funds.

A Salary Account,  especially from IDFC FIRST Bank, has a unique set of benefits, including:

· Zero balance requirement

· Free drafts and pay orders

· Freedom from debit card fees*

· Free personal accident insurance coverage worth ₹35 lakhs*

· Salary Accounts earn monthly interest credits

· An account with no minimum balance and unrestricted use of ATMs*

*Terms & conditions apply

How to convert a Savings Account to a Salary Account?
 

The process of converting a Savings Account to a Salary Account is easy to follow. For the monthly pay credits to be paid to the same account, you must provide the current bank details to your employer. Additionally, let your bank branch know that the bank's employment mapping has to be modified.

It may be possible if you change your job, provided your new employer has a financial arrangement with the same bank to pay their employees' salaries. To change, you must have a corporate partnership with the bank or be a registered firm with them. 

Although the terms of a Salary Account are agreed upon by both the bank and the account holder, once converted, it will no longer provide you with the same advantages. If your account is not a joint bank account, you can make the conversion from one to other. You can also convert your Online Savings Account to a Salary Account.

Your new job and your Salary Account
 

Ask your new company whether they would allow you to keep holding onto your current Salary Account before converting your old Salary Account (you had it in your previous job). If the new organization also holds accounts with the same bank, you can continue with the same. You can avoid having another Salary Account as a significant amount of paperwork would be required to open a second one.

Can anyone apply?

Individuals who meet the following requirements can open it. They include:

• Indian nationals
• Individuals from India
• Foreign nationals who are residents of India and meet the GOI requirements  

Documentation needed to open a digital bank account 

• Form 60, PAN card, and Aadhaar card

Opening a physical bank account

To open a bank account, you need:

• Passport-sized photo
• PAN card

You may choose from the following documents:

• Your Aadhaar card
• Your passport
• Your Voter identification card (Election Card)
• A valid, permanent driver's license with a photo
• An NREGA Job Card legally signed by a State Government official
• A letter with your name and address issued by the National Population Register

Do you require a second Savings Account?

Consider opening a new Savings Account if your new employer doesn't already have one with the bank where you previously maintained your Salary Account. There are now two approaches to this. Converting your previous Salary Account is advised if it was the first account you owned.

By doing this, you will have a Savings Account in addition to your current income account where you can receive funds from other sources and pay for investments like Systematic Investment Plans (SIPs), EMIs for loans, or any insurance you might need.

You can also consider opening a high-yield money market account which gives you high-interest rates. MMAs let account holders earn interest on their holdings, much like Savings Accounts. Typically, the savings interest rates are higher than a conventional Savings Account.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.