Table Of Contents
- Banks typically require documentation and a minimum deposit to open a savings account
- It’s key to compare and contrast savings accounts’ APY rates, fees, and withdrawal limits before applying to an account
- Savings accounts can be opened online, in person, or sometimes over-the-phone
- You will typically know if you’ve been accepted for a particular account within a couple of days
Opening A Savings Account 101
Savings accounts are financial accounts that provide a low level of interest while still being fairly accessible via a bank or credit union. These accounts are ideal for short-term saving, like building emergency funds or putting together money for a vacation.
To open a savings account, you typically need to gather documents verifying your identity and address. In some cases, you may need to provide a minimum deposit amount, or an upfront sum to open the account.
Savings accounts usually have a monthly transfer limit and may have maintenance fees depending on the account’s parameters. As outlined below, it’s key to compare and contrast various types of savings accounts to find the right solution for your specific situation.
Step-By-Step Guide To Opening A Savings Account
Opening up a savings account is a lot easier than you may expect. Use these steps to open up a savings account with any bank:
1. Gathering The Required Information
You and any joint bank account holders will need to provide some information and backing documents upon opening up any savings account. It’s a good idea to have the following documents compiled to help you set up your savings account as efficiently as possible:
- A government-issued ID (passport, birth certificate, driver’s license)
- Address and proof-of-address (utility bill or lease)
- Date of birth
- Contact information
- Routing number from current bank (only applicable if you’re moving money from a previous account)
You’ll need to have all of the following documents regardless of whether you open an account online or at a local branch. Joint bank accounts will require documentation for all account owners.
2. Comparing Savings Accounts
You want to make sure that you’re selecting the right savings account for your individual situation. As detailed below, you should consider factors such as APY rate, fees, transfer limits, and your purpose behind the savings account before you choose your preferred bank.
3. Opening The Account And Funding It
Once you’ve found a savings account you feel good about, it’s time to send in your application. At this point, you’ll be asked to upload all of the required documents and provide the financial institution with the minimum required deposit if applicable.
After applying to the savings account, you should know the bank’s decision within a couple of days. Assuming your application is accepted, you can then use your account details to create an online login for your savings account so that you can manage your money online or through a mobile app.
4. Monitoring Your Money
Even if you don’t plan on touching your savings account for a while, it’s good practice to check in on your financial accounts on a regular basis. Keep in mind that your savings account APY is variable, meaning it can fluctuate according to the latest economic conditions.
Managing Your Savings Account
Most banks and credit unions provide some form of online banking, which typically allows you to manage and set up savings accounts without ever having to step foot into a local branch. To set up online banking, go to your financial institution’s official website and look for the option to open an account.
Your bank of choice likely has tutorial videos walking you through their specific process, but generally, you’ll be prompted to create an online login after setting up your initial savings or checking account with your bank of choice. From there, this login can be used to access your bank account via a web browser or with the bank’s companion mobile app.
Note that you’re required to provide personal information and documents proving your identity upon opening an account, so it’s understandable if you feel more secure opening up your savings account at a local branch if your bank provides them. In this case, A branch worker can help you set up an account in person and give you all of the necessary information to set up your online account during your setup session.
Can An Account Be Opened Online?
In most cases, you should be able to open a savings account online. In fact, some banks, like Axos Bank, Ally Bank, and SoFi Bank, are 100% online– so there’s no option to open up a savings account in person or otherwise. Banks with physical locations will allow you to open up savings accounts at local branches and some will provide over-the-phone service.
Before opting to open a savings account, make sure you do your research to find the best savings account for your needs and meet the criteria regarding documentation and minimum initial deposit.
How To Choose The Best Savings Account
Under the umbrella of savings accounts, there are many different options available. Use these factors to determine the best savings account for your situation:
- Account Intention: Some types of savings accounts are best suited to one use case over another. For example, if you’re saving for a large goal and don’t need immediate access to the money, it’s best to opt for a high-yield savings account to earn as much interest as possible. Short-term savings, like building an emergency fund, may be best suited to be under the same bank as your checking account for easy access.
- APY Rate: Your APY rate, or annual percentage yield, describes how much interest you’ll earn based on your account balance over the course of a year. The higher your APY, the more you’ll earn. If you have a balance of $1000 and a 2% APY, you’ll earn $20 of interest over the course of a year, for instance.
- Fees: You’ll find that some savings accounts may charge a monthly maintenance fee if you do not meet the minimum set balance or make enough qualifying transactions. This fee can be waived by meeting the account’s specific requirements, but preferably opt for a no-fee savings account.
Even though fees are generally minimal, the monthly cost adds up over time and may outpace your rate of APY. You’ll also want to consider the prospect of closeout fees, a charge that’s taken out of your account upon closing your savings account. This is enforced by some banks to prevent users from opening and closing out accounts within the first 180 days of creating it.
- Transfer Limits: Savings accounts are different from checking accounts in that there is sometimes a cap on how many times you can withdraw money from the account. Many savings accounts allow up to six withdrawals or transfers per month without penalty. In any case, it’s key to understand what those penalties or limits may be before submitting an application for the account.
- Other Factors: Take into consideration whether your bank is backed by FDIC or NCUA insurance. If you prefer having access to an in-person branch, make sure to scope out how available your bank of choice is in your area of residence.
Frequently Asked Questions (FAQs)
What is required to open a savings account?
To open a savings account, you need documents that verify your age, address, and identity. Some savings accounts also require a minimum initial deposit before opening an account. Once you submit the above, the bank will process your application and hopefully grant your savings account.
How old do you have to be to open a savings account?
By law, you must be at least 18 years old to open your own savings account, since doing so requires signing off on a legal document. Teenagers may be able to open a joint savings account by co-signing with a parent or legal guardian.
Can you open a savings account online?
Yes! In most cases, you can open a savings account online through a bank or credit union so long as you meet all of the account’s criteria. Savings accounts can also be opened in person at a local branch or in some scenarios, over the phone.
In short, signing up for a savings account is fairly simple. With a couple of documents for verification and the required minimum deposit, you can kick off your saving journey.