A savings account is an important financial tool that helps protect your money and allows it to grow. Whether you’re getting a savings account for the first time or interested in switching banks, knowing the steps to open a savings account can help you streamline the process.
How to Open a Savings Account
“The process to open a savings account varies by bank, but typically, you can open an account in person or online by showing the appropriate proof of identification and filling out an application with your information,” says Kendall Meade, a certified financial planner at SoFi.
The steps may vary depending on the bank and type of account, but here are the common steps involved:
- Compare your options. Start by deciding which bank and type of account best suits your needs. Meade says it’s important to look for an account that offers a high interest rate so your savings can earn money and grow. Additionally, “look for an account that won’t punish you for dropping below a certain balance at any time,” she says. You may also want to consider accounts with features that make your life easier, Meade adds, such as ATMs in your area or mobile check deposits.
- Check the requirements. Each bank has its own set of requirements for opening an account. Some banks may require you to be a certain age, or have a minimum balance, for example. Make sure you meet these requirements before proceeding.
- Compile documentation. Opening a bank account is usually simple, but there are a few key documents you should be prepared to provide. These may include a valid form of identification such as a passport or driver’s license, as well as proof of your address.
- Fill out an application. Once it’s time to fill out the savings account application, you’ll need to provide some personal information, including your name, address, phone number and Social Security number or individual taxpayer identification number.
- Fund the account: Many banks require you to make an initial deposit when opening a new savings account. The required minimum deposit will vary depending on the bank and the type of account. You can usually fund your account with a check, cash or an electronic transfer from another account.
- Review and submit your application: Review all the information on your application one last time to ensure it’s accurate – errors can lead to delays in opening your account. Once you’re sure everything is correct, you can submit the application.
How to Open a Savings Account Online
Both traditional brick-and-mortar institutions and online-only banks offer the capability to open a savings account entirely online. The process is largely the same as opening a savings account in person; the main difference is there is no one from the bank present with you as you complete the application.
That said, you won’t be completely on your own. Most financial institutions offer online support, whether it’s via phone, email or even live chat. You’ll also be able to submit your necessary documentation by uploading it as part of the application process.
How to Choose the Best Savings Account
“So long as your bank is FDIC-insured, your deposits are safe up to at least $250,000 per bank, so picking a bank comes down to whether they offer the products that you’re looking for, with competitive rates and good customer service,” says Gary Zimmerman, founder and CEO at cash management platform MaxMyInterest.
Zimmerman notes that some people might prefer a savings account with a brick-and-mortar bank if they are concerned about accessing services such as depositing cash or getting cashier’s checks. However, many of these services are now available with online accounts, too. “Plus, online banks can offer better pricing since they don’t have to pay for the costs of operating brick-and-mortar branches,” he says.
Types of Savings Accounts
Though you might be searching for a basic savings account to set aside funds for a rainy day, it’s important to note there are several types of savings accounts offered by most banks and credit unions. Each has its own special features that could help you reach your financial goals faster.
- Basic savings accounts. These are straightforward accounts that allow you to deposit money, earn a small amount of interest and access your funds relatively easily. However, they typically do not offer high interest rates.
- High-yield savings accounts. These are savings accounts with higher interest rates than regular savings accounts. They’re often found at credit unions or online banks, which have lower overhead costs than traditional brick-and-mortar institutions and can therefore provide better returns.
- Money market accounts. These accounts work like checking-savings hybrids, often offering higher interest rates and check-writing or debit card privileges. However, they may require a higher minimum balance and limit the number of transactions you can make each month.
- Certificates of Deposit. With these accounts, you agree to leave a certain amount of money on deposit for a specified period (the term), which can range from a few months to several years. In return, you get a guaranteed interest rate. You will face a penalty fee if you withdraw your money before the term ends.
There are many other specialized types of savings accounts, such as those designed for kids, students, seniors and more. If you’re looking for a savings account with specific features, reach out to your financial institution to find out what it offers, and do some research online to see if there’s an account that matches your needs.
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