Changing jobs brings a lot of new excitement—new responsibilities, colleagues and often a different salary account. Amidst these transitions, it’s easy to overlook what happens to your existing salary account. Many people don’t think about it until they start expecting unexpected deductions. Let’s break it down in simple terms to ensure you’re well informed about your financial well-being.
Understanding salary accounts
A salary account is typically opened by your employer to credit your monthly salary. One of its primary perks is the zero-balance feature which allows you to operate the account without maintaining a minimum balance. However, this benefit is contingent upon regular salary credits from your employer.
The moment you miss two consecutive salary credits; your salary account is converted into a regular savings bank account. From there, the terms and conditions shift.
What happens when your salary account becomes a savings account?
- Minimum balance rule kicks in
The moment your account transitions into a savings bank account, it comes under minimum balance requirements. Depending on the bank and your account type, this could range anywhere from ₹5,000 to ₹15,000. If you don’t maintain this balance then you can expect monthly deductions. These non-maintenance charges might seem small at first but over time, they can significantly eat into your balance.
- Loss of exclusive perks
Salary accounts often come with benefits like free ATM transactions, higher withdrawal limits and preferential banking services. Once the account is converted then these perks disappear, and regular savings bank account charges apply.
- Unwanted deductions and negative balance risk
Ignored accounts don’t just stay idle. If your balance is too low for maintenance charges, your account can go into a negative balance. When you deposit money next time, a part of it may be deducted automatically.
- Auto debits and standing instructions may fail
If you had EMIs, SIPs or insurance premiums linked to your old salary account, they may start failing due to insufficient funds. Missed payments could lead to late fees or even impact your credit score.
Should you keep or close your old salary account?
Before you take a call, check if your new employer uses the same bank for salary accounts. If they do then you can continue using your old salary account, however, you must update your respective bank with the new employer’s information. In this case, no action is needed—your account will remain a salary account and you won’t have to worry about minimum balance requirements.
But if your new company has partnered with a different bank then your old salary account will stop receiving credits and be converted into a savings bank account. At this point, you need to decide whether you want to keep or close your old account.
When it makes sense to keep it:
- You can easily maintain the minimum balance after it converts to a savings bank account.
- You want to use it as a backup account for savings, transactions or emergencies.
- The account comes with valuable perks or exclusive banking benefits you still find useful.
- Your new employer uses the same bank and your salary continues in the same account.
When closing it is a better option:
- Your new employer has switched to a different bank and you don’t want to maintain the minimum balance.
- You don’t want to track multiple accounts and statements.
- The account has become inactive and you want to avoid penalties or negative balances.
- You are switching to a different bank for better services or benefits.
Once your salary stops getting credited, your account doesn’t just stay as it is—the bank starts treating it like a regular savings account. If your account serves you well, keep it active and manage it wisely. If not, closing it in time can help you avoid unnecessary charges. Take a decision well within two months to avoid penalties and help you stay in control of your finances.
FAQs
- How long can I keep my salary account after leaving a job?
There’s no fixed time limit, but most banks convert a salary account into a savings bank account after 2-3 months without salary credit. This means you’ll need to maintain a minimum balance to avoid charges.
- What happens if my old salary account has a zero balance after conversion?
Once converted, banks expect you to maintain a minimum balance. If your account stays at zero for too long then banks may deduct penalties, mark it as dormant or even close it automatically after a certain period.
- Can I reopen a closed salary account if I need it later?
No, once an account is permanently closed then it cannot be reopened. You’ll need to apply for a new savings bank account if you wish to bank with the same provider again