How To Open a Savings Account (original) (raw)

A savings account offers a safe place to store your money and earn a interest in the process. Opening a savings account can be an easy process and can typically be done in just a few steps, whether online, over the phone, in person or by mail. The MarketWatch Guides team will walk you through the process below.

Key Takeaways

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How To Open a Savings Account in 8 Steps

1. Pick an Institution

Almost any bank or credit union will offer a savings account, but it can be tricky to find the right one. If in-person banking is important to you, look at financial institutions in your area that give you easy access to branches and ATMs. If you’re looking at an online account, take a look at the bank or credit union’s mobile app and features, like remote check deposit.

Then, consider each account’s interest rates, monthly fees and minimum opening deposit requirements. If that seems daunting, you can look at the MarketWatch Guides list of the best savings accounts on the market today.

>> Related: Learn more about bank account promotions

2. Gather Correct Documentation and Identification

Typically, to open a U.S. bank account you’ll need to provide your Social Security number and other government-issued identification documents such as a valid passport, driver’s license or state ID. You may also need proof of address with documents such as a utility bill, rental agreement or mortgage statement.

3. Select a Method To Open the Account

Most banks offer more than one option to open a new account. Here are the most common ways you can open a new savings account.

To apply online, navigate to the type of savings account you want to open on the bank’s website. Once there, you’ll typically see a button you can click that says “Apply Now,” “Open an Account,” or something similar.

After selecting that option, you’ll likely be taken to a page where you can enter your basic personal information, including your name, date of birth, address, phone number, Social Security number or Individual Taxpayer Identification Number (ITIN) and birth date.

Some banks may also ask you to upload a picture of your ID. You may also have to enter your employment or income information, as well.

You’ll likely have to check a box to agree that the bank can verify your identity based on the information you’ve provided. This is known as a soft credit check and should not impact your credit score.

Next, you can select the type of savings account you want if the bank offers more than one option. Some banks may ask you to set up your online account with a username and password at this stage. Finally, you’ll be given instructions on how to fund your new account.

Opening a savings account in person is a similar process to opening an account online. A bank representative will confirm with you the type of savings account you wish to open and help you enter your personal information into their system. You’ll have to provide your Social Security number or ITIN and birthdate, as well as present a government-issued proof of identity.

You should be prepared to either make a transfer from an existing checking account or provide a check or cash to fund any initial deposit requirements.

You may be able to start the process of applying for a savings account over the phone, but most will require finishing the process in person or online. Speaking to a bank representative over the phone can help you get any questions answered quickly so you feel confident in your decision to choose a particular bank.

Given the widespread availability of online applications, it’s uncommon to find a bank that will let you open an account via mail. However, some smaller banks or credit unions may give you the option to mail in your application. In this case, you can print out a form to fill in with your basic information, along with your Social Security number or ITIN. You may have to make a copy of your ID and proof of your address and mail that in as well.

4. Choose Single or Joint Accounts

Many banks offer both single and joint savings accounts. A single account is when there is just one account holder and a joint account is when there are two or more account holders, each with equal ownership rights. For example, you may have a joint account with your spouse.

If you’re opening a joint account, the process can vary by bank. Some banks will have just one applicant complete the process and then additional account holders can be added later, while some have you add the other account holders during the initial account opening.

Each person whose name is on a joint account will have to provide their basic information and Social Security number to be added to an account.

5. Complete Application

Once you fill out your information online and upload any requested documentation, you’ll be able to submit your application. Or, if you’re applying in person, you’ll fill out a paper application and show your ID and the bank representative will enter your application into their system.

Depending on the bank, the time of day your application was submitted and your credit history, you could be approved within seconds or have to wait for the next business day or two to get an answer.

Once you’re approved, you’ll usually have to agree to the account’s terms of service, either by checking a box online or by signing a paper or through an electronic signature at the bank.

6. Provide Initial Deposit

Some banks require an initial deposit to open a savings account. This minimum deposit requirement will be disclosed when you’re reviewing the account details at the beginning of the application process. The minimum deposit requirement is different at every bank, with some not requiring anything and other banks requiring 25to25 to 25to200 or more.

Depending on the bank, you can fund your initial deposit by doing an automated clearing house (ACH) transfer from an existing account if you’re applying online or with cash or a check from an existing account if you’re applying in person.

7. Receive Account Information

After completing the application process, the bank will provide you with your account details, including your account number. If you’re applying online, you may receive this information electronically.

8. Set Up Online Banking

If you’ve applied for your savings account online or if the bank offers online banking services, you’ll be prompted to set up online access by picking a username and password. You can use this to log into your account on a computer or via the bank’s mobile app for convenient access.

Types of Savings Accounts

Just as there are different types of savers, you’ll also find various types of savings accounts. To make sure your money is secured, you’ll likely want to make sure the financial institution you choose is insured by either the Federal Deposit Insurance Corp. (FDIC) for banks or the National Credit Union Association (NCUA) for credit unions. Here’s a breakdown of some of the most common savings accounts:

A traditional savings account is the most straightforward type of savings account, generally requiring a low or no minimum opening deposit and offering a modest rate of interest on your money. The national average savings rate is currently 0.46%, according to the latest data from the FDIC.

These types of savings accounts may come with monthly maintenance fees, but those can sometimes be waived if you meet certain criteria – such as maintaining a certain amount of money in the account or making regular deposits.

High-yield savings accounts offer interest well above the national average. The best high-yield savings accounts offering the highest APYs are typically found through online-only banks or smaller banks and credit unions. This may mean that you can only manage the account online or you may have to join the credit union to open an account.

Student accounts are tailored to the needs of newer savers who are in high school or college. They often have no or minimal monthly maintenance or opening deposit fees and come with other perks like debit cards or waived overdraft fees. If you’re under age 18, you may need a parent or other adult as a joint owner of the account.

A CD is a time-based deposit that earns a fixed rate of interest. The terms can range from three months to five years, or more, and during the CD’s term length, you’ll pay a penalty if you need access to those funds before the maturity date.

The rate of interest you’ll earn on a CD will vary based on the bank, the term length and any promotional rates a particular bank chooses to offer. Online banks tend to offer higher rates than brick-and-mortar-based banks since they have lower overhead.

The Bottom Line: Opening a Savings Account

Once you’ve identified which savings account you’re interested in, applying can be done in a few simple steps. Applying online is typically the easiest and fastest way, and for online banks, it’s the only option. However, those who prefer an in-person experience can apply at a branch location. Some smaller banks or credit unions may let you start the application process over the phone or allow you to mail in an application, although these are less common.

Regardless of which type of account and method of opening is right for you, having a savings account is a great way to build up an emergency savings fund or meet other financial goals. Our list of the best savings accounts is a great place to learn more about the top options currently available.

FAQ: How To Open a Savings Account

To open a savings account, you’ll need to provide your personal information including name, address, phone number, Social Security number or ITIN, a government ID such as a driver’s license or state ID and proof of your address, such as a utility bill or rental lease.

Additionally, if the account you’re applying for has a minimum opening deposit requirement, you’ll need to be prepared to fund the account with either an ACH deposit, wire transfer, check or cash.

There’s no set amount of money needed to open a savings account. Many savings accounts don’t have minimum balance requirements, although some may have minimum deposit requirements to open the account – often between 25and25 and 25and200.

Yes, you can open a savings account online. For online-only banks such as Ally, SoFi or Discover, that’s your only option. For credit unions and traditional banks, you usually have the option to open an account online or in person at a branch.

To make sure that your money is safe, be mindful of choosing a bank that is FDIC-insured or, in the case of a credit union, NCUA-insured. Both of those non-government agencies cover funds up to $250,000 per depositor.

*Data accurate at time of publication

Editor’s Note: Before making significant financial decisions, consider reviewing your options with someone you trust, such as a financial adviser, credit counselor or financial professional, since every person’s situation and needs are different.