What happens to your salary account if you switch jobs? All you need to know
Switching jobs is an exciting time—new opportunities, better pay, and perhaps a new workplace environment. But amidst all this change, what happens to your salary account? Is it something you need to worry about? Often, people are unsure about whether they should close the account, carry it forward, convert it to a normal savings account, or open a new one with a different bank.
Let’s break it down so you know exactly what happens to your salary account when you change jobs and what steps you should take.
Here are top things you need to know about your salary account when switching jobs:
Salary account status changes to savings account
When you leave a job, your employer stops crediting your salary to the account associated with your previous employment. A salary account functions only as long as regular salary credits are happening. After a certain period, usually three to six months of no salary deposits, some of the banks convert the status of the salary account to a regular savings account while some continue maintain the account as a Salary Account.
This means that while you still have access to the account, the terms and conditions can change. The most noticeable difference is the imposition of a minimum balance requirement, which was not needed when the account was classified as a salary account. If you fail to maintain the minimum balance, the bank could start charging non-maintenance fees, reducing your funds over time.
Option to open a new salary account with your new employer
When you switch your job, your new employer may offer to open a fresh salary account for you, typically with a bank they have partnered with. These salary accounts often come with special benefits like zero balance requirements, better interest rates, and additional services.
While it is not mandatory to close your old salary account after switching jobs, opening a new one might make things simpler. However, managing multiple accounts can become difficult, especially if you have auto-debits, bill payments, or investments linked to multiple accounts.
If you choose to keep the old account open, you need to keep track of its requirements and usage to avoid issues down the road.
Benefits offered on salary accounts
If your new employer offers a salary account with another bank, it may come with several attractive features. For instance, a salary account with IDFC FIRST Bank may allow you to enjoy zero-fee banking, meaning no fees are charged on services like ATM withdrawals, online transfers, and cheque processing.
Additionally, you earn monthly interest credits on your savings, boosting your account balance. IDFC FIRST Bank also provides access to complimentary memberships, including Times Prime, Swiggy One, and Amazon Prime, which add value to your lifestyle. Furthermore, if you ever need to close the account, no closure charges are applied, making the experience seamless and hassle-free.
Auto-debit mandates might be affected
Many people link their salary accounts to essential payments like EMIs, SIPs, insurance premiums, and utility bills via auto-debit mandates. If your salary account is converted into a savings account or if you open a new salary account, you need to update these auto-debit instructions.
Failing to do so can lead to missed payments, which could result in penalties, late fees, or even disruption of services. It is a good practice to review all your linked payments whenever you switch jobs and update the account information with your bank and respective service providers.
Ending note
When you switch jobs, your salary account would require you to maintain a minimum balance in the account to avoid charges.
Banks like IDFC FIRST Bank offer attractive salary account benefits such as zero fees and complimentary access to OTT subscriptions, making it worth exploring. While managing multiple accounts is possible, keeping an eye on mandates and balances is crucial to avoid penalties.
In short, understand your options and keep your accounts in check to ensure a smooth financial transition when switching jobs.
