The Zero Balance Myth
The most attractive feature of a salary account is often the 'zero balance' facility. However, this benefit is almost always conditional. It applies only as long as your employer regularly credits your salary into the account. If you switch jobs and your salary stops
coming in for about three consecutive months, most banks will automatically convert your salary account into a regular savings account. Suddenly, the account is no longer free. It becomes subject to a Minimum Average Balance (MAB) requirement, which could be anywhere from ₹10,000 to ₹25,000 for urban branches. Fail to maintain this balance, and you'll be hit with non-maintenance charges every month. Before you sign up, ask the bank what the MAB requirement will be if the account is converted.
The Debit Card Fee Trap
Salary accounts typically come with a debit card that has its issuance and annual fees waived. However, this waiver might only apply to the basic card variant. Banks often issue higher-tier cards with more features by default, which may carry an annual maintenance charge (AMC) of ₹150 to over ₹750 plus GST. These fees are debited directly from your account each year. Another hidden charge is the cross-currency mark-up, often around 3.5%, for any international transactions you make with the card. Always check your welcome kit to see which card you've been issued and what its annual fee structure is. You can always request a downgrade to a free variant.
Counting Your Transactions
Free transactions are another perk, but they are rarely unlimited. Banks set a cap on the number of free ATM withdrawals you can make per month, especially from other banks' ATMs. Beyond the typical five free transactions, you could be charged around ₹23 plus taxes for each withdrawal. Similarly, services like IMPS, NEFT, and RTGS might be free through net banking but could attract charges if done at a branch. Even SMS alerts, which seem like a basic service, might be free only up to a certain limit per month, after which you are charged per message. These small charges add up, so it's wise to understand the 'fair usage policy' for your account.
The Exit Obstacles
What happens when you leave your job and want to close the old salary account? It's not always a simple process. Many banks levy an account closure charge, which can be around ₹500 plus GST, if you close the account within a year of opening it. While there are usually no charges for closing an account that's more than a year old, it requires a visit to the branch and paperwork. Instead of closing it, you could ask the bank to convert it to a regular savings account, but be prepared for the MAB rules to kick in immediately. The best strategy is to decide quickly whether to keep the old account (and fund it) or close it cleanly to avoid penalties piling up.
Beware of Bundled 'Freebies'
When opening a salary account, you might be offered a package of products, including free credit cards, insurance policies, or overdraft facilities. While some of these can be genuinely useful, they often come with their own set of hidden terms. A 'free' credit card might only be free for the first year, with annual fees applicable from the second year onwards. A bundled insurance policy might offer minimal cover and is often a way to upsell you into a larger policy. An overdraft facility is essentially a pre-approved loan that comes with interest charges. Politely decline any product you don't fully understand or need at the moment. You can always apply for them later.
