Converting salary account into savings account! Five things to keep in mind

After moving into a new job, check with the new employer if they maintain a salary account agreement with the existing bank. In case, the new employer does have a relationship with the bank then one can easily continue the salary account instead of letting it convert into a savings account.

Nov 13, 2015 09:11 IST India Infoline News Service

With the change of jobs comes the change of bank accounts too and if overlooked, the task of managing the increased number of bank accounts can become overwhelming. Also, a salary account will convert automatically into a savings account if there is no credit of salary for a specified number of months such as three or six months.

Here are some of the easy steps explained to help manage such accounts efficiently.

1. Check with the new employer - After moving into a new job, check with the new employer if they maintain a salary account agreement with the existing bank. In case, the new employer does have a relationship with the bank then one can easily continue the salary account instead of letting it convert into a savings account.

2. To retain it or not - If an existing salary account is the only bank account, then it is recommended to let it convert into a savings account after cessation of employment with the previous employers. While the new bank account opened with the new employer can function as salary account, the converted savings account can be used for other purposes such as SIPs, investments and expenditure.

3. Keep an eye on Minimum Balance Requirement - Once a salary account converts into savings accounts then, the minimum balance requirement will be applicable on it. If an individual views such requirement to be too much to sustain then, he/she can apply for closure of the bank account.

4. Should add convenience - Convert a salary account into savings account only if it is serving one’s purpose and adding to the convenience. For instance, the ATMs should be easily accessible for the account holder, and the branch locations should be nearby. If such aspects are missing about the existing salary, account then its best to close it at the earliest.

5. Other factors - If the existing bank is too stringent about the facilities extended for an account and are less responsive to the complaints or queries then its best to close the account and look for alternative banks. 

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