How To Open a Savings Account
A savings account allows you to hold your money, whether for an emergency fund, a short-term goal or a long-term, big-ticket item like your child’s education, your wedding or a down payment on a house.
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Opening a savings account is easy. It’s figuring out which savings account to open that is more difficult. You’ll need to take a few steps — and have key information available — before taking the step to launch your savings account.
How To Open a Savings Account
The steps to open a savings account are straightforward, and many financial institutions allow you to do it online from a computer or mobile device. In some cases, however, you might need to open the savings account in person, such as if you have a limited credit history, have had issues with your banking history or want to deposit a large sum of money.
The process of opening a savings account typically involves the following steps:
Choose a financial institution
Gather your personal information
Determine your type of account
Apply online or in person
Fund the account
Set up online banking
Here’s a closer look at how to open a savings account.
1. Choose a Financial Institution
You have plenty of options when selecting a savings account, from traditional savings accounts at your local bank to high-yield options offered by online financial institutions.
Before you open an account, compare different banks and the types of savings accounts they offer. Consider the following factors to help you determine which bank best suits your needs:
Interest rates: The higher the interest rate, the more your balance earns. Compared to traditional brick-and-mortar banks, online banks often offer higher interest rates.
Access to money: Since online banks don’t have physical branches, you’ll have to find a local ATM or wait for a bank-to-bank transfer to go through when you want to withdraw cash.
Balance requirements: Find out whether you maintain a minimum balance to avoid a monthly service charge or earn the maximum amount of interest.
Fees: Look for other fees that take away your savings, such as excess withdrawal fees.
The best option for you will be the one that best matches your needs. Some investors, for example, only seek the highest-yielding account, regardless of other factors. Others might be concerned about meeting a minimum balance requirement or paying fees for potential overdrafts. As all savings accounts are different, it’s important to review all of the features and benefits – and potential negatives – before you decide on one. Most banks have FDIC insurance, for example, newer “financial technology” or “fintech” companies rely on other types of insurance, or perhaps not have any at all, and that’s important to know.
A good place to start looking is GOBankingRates’ Best Savings Accounts.
You can’t open a bank account unless you provide your financial institution with certain personal and financial information. In addition to your driver’s license or other government-issued ID on hand when you’re ready to apply.
You’ll also need to provide these details:
Some banks also might ask for proof of residence, such as a copy of your lease or a utility bill in your name.
When you open your account, you’ll choose whether you want an individual account, a joint account or some type of specialty account, like a trust account.
If you’re opening a joint savings account, provide personal details for all account holders. Since all parties on the account have equal access to the deposited funds, you’ll want to open it only with a trusted person who shares your savings goals.
To open an account online, begin by filling out the application at your preferred financial institution’s website. You’ll have to provide personal details to get started, including your name, address and contact information. Then follow the prompts to move through each section of the application.
Alternatively, opening an account at a local branch is easier. Have your documentation and initial deposit with you.
After the bank approves your application, you can deposit money into the account through an electronic transfer or by using a check, debit card or money order, depending on your bank’s offerings. The minimum opening deposit amount varies by bank, with some banks choosing not to require one. Some banks place deposits on hold, particularly if you’re opening an account, so be sure you’re okay with the institution’s policies before you fund your account.
Even traditional banks offer online banking these days, making the whole process much more convenient. Using a website or a mobile app, you can easily check your account, transfer balances or even activate or disable your ATM card, if applicable. Online banking is free and banks make it easy to enroll.
Michael Keenan, Jami Farkas and John Csiszar contributed to the reporting for this article.
This article originally appeared on GOBankingRates.com: How To Open a Savings Account
